Bank of Italy. Fazio’s future

Italy's central-bank governor is under pressure to resign

ANTONIO FAZIO likes his job as boss of the Bank of Italy. He has worked at the central bank since 1966, becoming its governor in 1993. He is one of the best paid and most powerful central bankers in the world. Like the pope's, his appointment is for life.

It is little wonder, then, that Mr Fazio is fiercely resisting calls for his resignation as a consequence of his role in the supervision of the takeover battle between Banca Popolare Italiana (BPI) and ABN Amro, a Dutch bank, for Banca Antonveneta. He denies any wrongdoing, and so far he is not under investigation in the ongoing probe of allegations of violations of securities laws at BPI. But his career is nonetheless on the line.

Transcripts of telephone conversations between Mr Fazio and Gianpiero Fiorani, boss of BPI, tapped by prosecutors investigating BPI and reported in the Italian press last week, implied that he actively favoured BPI's bids. This week brought worse. On August 3rd La Repubblica and other papers published more revealing details of the cosy chats. “Caro Gianpiero, I will take care of Consob,” said Mr Fazio in one conversation in June when he assured Mr Fiorani that he would put pressure on the boss of Consob, the securities-market regulator, to approve BPI's bid for Antonveneta.

Mr Fazio has been under fire before. He has been criticised for his close relationship with Cesare Geronzi, chairman of Capitalia (the former Banca di Roma). In 1999 Mr Fazio, heavily lobbied by Mr Geronzi, vetoed a bid for Banca di Roma by Sanpaolo IMI, a big bank in Turin, without much of an explanation. He then allowed Banca di Roma, though saddled with bad debts at the time, to buy two sickly banks.

Though muttering there has been, some of it from within the Bank of Italy, never has his competence in supervising mergers and acquisitions, and competition in banking more generally, been questioned as openly as it is today. Mr Fazio has definitely lost his credibility as an impartial arbiter of Italian banking, says Federico Bay at Uniprof, a fund manager in Milan. He speaks for many.

If Mr Fazio should decide to go, various candidates are waiting in the wings. One is Tommaso Padoa-Schioppa, a former member of the board of the European Central Bank and once the boss of Consob. Another is Mario Monti, a respected former European Competition Commissioner. There is also talk of appointing an insider, Pierluigi Ciocca, who is deputy director-general of the Bank of Italy.

Much of Mr Fazio's decision depends on whether Silvio Berlusconi, the prime minister, will back him. So far Mr Berlusconi has shied away from suggesting that the governor, who has supported his economic policies, should resign. He may well be undecided: he excused himself because of sickness from the cabinet meeting on August 3rd about Mr Fazio's role in the Antonveneta affair.