Bank of Italy governor steps down

Bank of Italy governor Antonio Fazio has resigned, a central bank spokeswoman has announced.

Pressure had been mounting on Mr Fazio to quit following a scandal over the sale of Italy’s Banca Antonveneta.

Mr Fazio is facing an investigation into suspected insider trading and abuse of office relating to his handling of the bank takeover battle.

He is accused of favouring an Italian buyer in the takeover of Banca Antonveneta earlier this year.

Mr Fazio has strenuously denied the accusations and repeatedly stated that he behaved properly when deciding to recommend Banca Popolare Italiana (BPI) over Dutch rival ABN Amro.

Allegations first emerged in July when leaked transcripts of a phone-tapped conversation suggested that Mr Fazio had favoured BPI over its Dutch rival in the battle for control of Banca Antonveneta.

Despite calls for his resignation from many of Italy’s political elite, including Prime Minister Silvio Berlusconi, the 69-year-old career central banker refused to resign.

Under current Italian law, the governor of the Bank of Italy is entitled to remain in office for life.

However, Mr Fazio’s position became increasingly untenable after prosecutors in Milan revealed they were investigating him for alleged insider trading.

The pressure increased on Monday when Italy’s Economy Minister Giulio Tremonti said he wanted parliament to change the laws governing the Bank of Italy, paving the way for Mr Fazio to be replaced.

Former BPI boss Gianpiero Fiorani – a close associate of Mr Fazio’s – was arrested last week on suspicion of embezzlement and market rigging.

The European Central Bank (ECB) said its president, Jean-Claude Trichet, had been informed by Mr Fazio that he had intended to resign.

“The ECB fully respects this decision,” the bank said in statement.

The scandal surrounding the takeover of Banca Antonveneta had threatened to damage international confidence in Italy’s banking sector.

The country’s fragmented industry is widely seen as an attractive proposition for many investors because of the high profit margins and potential for restructuring at many Italian banks.

Until the scandal surrounding Mr Fazio blew up in July, he had been regarded as a safe pair of hands at Italy’s central bank.

For years he projected an image of the Bank of Italy as an incorruptible institution. He also ensured Italy was ready to ditch the lira and adopt the euro in 1999.

Although the subsequent banking scandal saw much of the political establishment turn against him, Mr Fazio – a devout catholic – still received support from the Roman Catholic Church and the right-wing Northern League.

A spokeswoman for the Bank of Italy said Mr Fazio had handed in his resignation to a member of the bank’s Superior Council earlier on Monday.

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