(ANSA) - There is no evidence that the Bank of Italy discriminated against two foreign banks involved in separate takeover bids of Italian banks, a European Commission spokesman said on Wednesday. "From the information we have so far, in particular from the replies the Bank of Italy has given to our queries, there is no indication of discriminatory treatment against (Spain's) BBVA or (Dutch bank) ABN AMRO," said Jonathan Todd, spokesman for Competition Commissioner Neelie Kroes. Nevertheless, the controversy regarding the conduct of the head of the Bank of Italy intensifies as opposition parties and several business leaders are calling for him to resign.
BBVA's bid for Banca Nazionale del Lavoro (BNL) met fierce resistance from Unipol,a small Italian insurance company. ABN Amro's bid for Antonveneta threw it against a small local competitor Banca Popolare Italiana (BPI). The takeover battle has reaped front-page headlines in recent weeks after it was alleged that Bank of Italy Governor Fazio worked behind the scenes to help the Italian banks against their foreign rivals.
Todd stressed that the EC has not yet "concluded" its case and was still monitoring the situation. The EC will decide "in the future whether Italian authorities acted in a way which was incompatible with EU regulations on mergers," he added. Despite the reprieve from Brussels, the situation at home was still incandescent for Fazio, as the centre-left opposition continued to call for his resignation.
Last Friday, after weeks of self-imposed silence, the governor defended his role in the affair, insisting that the central bank had done nothing wrong. Fazio told a three-hour meeting of the Interministerial Committee on Credit and Savings (CICR) that the Bank of Italy had always "scrupulously observed Italian and European Union regulations."
In a 24-page report to CICR, Fazio said the central bank was still monitoring and checking the situation of the Italian banks bidding for BNL and Antonveneta and would be prepared to "use its powers" if it noticed something amiss. But Economy Minister Domenico Siniscalco told the same meeting that the issue was not "the legitimacy of the paperwork" but a question of Italy's image. "The fact is that the Financial Times has written 167 articles" on the affair, he added.
Siniscalco had already warned the cabinet before the summer break that the affair was "creating a credibility problem for the country" and had sparked alarm among his European Union colleagues. Critics claim that Fazio's role in the banking takoever
battle has undermined the image, credibility and impartiality of the Bank of Italy.
Italian papers began publishing leaks of the transcripts of the phone taps late in July, after BBVA signalled it was about to back down in its bid for BNL, paving the way for a takeover by Unipol. At the same time, ABN AMRO also looked ready to give way
to its local competitor BPI. Publications of transcripts earlier in August indicated that Fazio had overruled Bank of Italy inspectors Claudio Clemente and Giovanni Castaldi who spotted irregularities in their review of BPI's bid for Antonveneta.
When the inspectors refused to change their report, Fazio turned to outside consultants and, after their positive appraisal, gave a last-minute go-ahead to BPI's bid. In the case of the takeover bid for BNL, transcripts of phone calls made by BankItalia Chief Inspector Francesco Frasca, one of Fazio's closest aides, show that the central bank favoured Unipol while refusing to talk to BBVA bankers.
But Fazio told CICR on Friday that there was no internal report at the Bank of Italy showing that the Italian bank did not have the funds to bid for Antonveneta. The wiretaps published by Italy's leading daily Corriere della Sera were requested by Milan magistrates investigating 20 financiers connected to BPI's bid, including CEO Giampiero Fiorani.
Fiorani, a close friend of Fazio's, has been barred by Milan prosecutor Clementina Forleo from acting as BPI's CEO. He was questioned by prosecutors on Wednesday. Rome prosecutors, who are also conducting their own probe into BPI's bid, have placed Fiorani and Frasca under investigation.
Although Fazio, 69, is not officially being probed, the publication of the transcripts has sparked indignation from both critics and friends, albeit for different reasons. Critics argue that Fazio, who is the only governor among the Group of Seven nations central bankers to have an open-ended term, must go. Their argument is that a governor must be impartial and above suspicion, as the image of the central bank must remain spotless.
Calls for his resignation have also come from the Bank of Italy's trade union FABI, which has repeatedly said that Fazio's reputation has been "irrevocably damaged" and he should step down. But Fazio's friends and Premier Silvio Berlusconi are
outraged that the transcripts were leaked to the press, saying this amounts to an unjustified invasion of privacy. They say that some of the transcripts, which included private conversations of Fazio's wife and the starlet girlfriend of a top financier, should never have been published.
The government plans to present a bill at the start of September introducing tough limits on wiretapping and longer jail sentences against whoever leaks or publishes transcripts. Berlusconi, who is personally involved in drafting the legislation, said he envisaged prison sentences of between five and 10 years for breaches of privacy involving unjustified use of phone taps. He said only probes into terrorism and the Mafia merited the practice.
