Italian banks. Capitulation

After a tortuous battle, a foreign takeover of an Italian bank is in sight

THE seven-month saga of the takeover of Banca Antoniana Popolare Veneta (Antonveneta) looks all but over. Late on September 14th, after a marathon meeting, the board of Banca Popolare Italiana (BPI) announced that it favoured the sale of its 29.5% stake in Antonveneta, Italy's ninth-largest bank, to ABN Amro, of the Netherlands, for about €2.5 billion ($3.1 billion). The Dutch bank, which already owns a similarly sized slice of Antonveneta, is keen to acquire BPI's stake as well as the remaining shares.

Assuming the deal goes ahead, it will herald Italy's first big cross-border bank takeover. ABN Amro looks set to win its prize despite the resistance of Antonio Fazio, the governor of the Bank of Italy, who has blocked foreign attempts to buy domestic banks throughout his 13-year tenure. Another foreign bid, by Spain's Banco Bilbao Vizcaya Argentaria for Banca Nazionale del Lavoro (BNL), failed in July. This week Consob, Italy's financial-market watchdog, approved a €4.9 billion bid for BNL by Unipol, an Italian insurer. The central bank and the insurance regulator are expected to approve the deal as well.

Mr Fazio has not only lost the battle for Antonveneta. Through his manoeuvres to keep Antonveneta in Italian hands he has damaged the Bank of Italy's hitherto fine reputation. He has little credibility as an impartial overseer of Italian banking. And he has frustrated foreign investors at a time when the Italian economy could do with interest from abroad.

The battle for Antonveneta started about seven months ago when ABN Amro launched a bid for the bank. As soon as Antonveneta's board had accepted it, BPI stepped in, pulling every available string to thwart the Dutch. It increased its stake in Antonveneta to 29.5%, just below the trigger set by Italian law for a mandatory cash offer for the rest of the shares. It lent money to several Italian businessmen to buy shares in Antonveneta without disclosing the loans. At a shareholders' meeting in April it teamed up with its allies to replace Antonveneta's board with a new one friendly to itself. And in June it launched its own bid for the target bank.

Mr Fazio has denied all accusations that he has acted improperly. Still, all this happened on his watch. Moreover, telephone conversations tapped by magistrates, who suspected that BPI was breaking the rules and had placed Gianpiero Fiorani, its boss, under surveillance, suggest that Mr Fazio intervened time and again to favour BPI's bid. However, the bank's manoeuvres led to a judicial inquiry and to the suspension of both Mr Fiorani and BPI's offer.

Now Mr Fazio is facing almost daily calls to resign. Italy's deputy prime minister and finance minister are among those who have called on him to go. The law, however, gives Mr Fazio life tenure. The government decided a few weeks ago to curtail the power of any successor when Mr Fazio does eventually leave, one way or another. With the governor's wings clipped and ABN Amro's success in sight, foreign banks ought to feel emboldened to take another look at Italy's fragmented banking sector.

• Primary Source