Bank of Italy's Fazio under fresh pressure to quit

Bank of Italy Governor Antonio Fazio faced renewed calls to quit yesterday after his close friend Gianpiero Fiorani was arrested in a criminal case that a ratings agency said had damaged the central bank's reputation.

Mr Fiorani, the former chief executive of Banca Popolare Italiana who was once wiretapped calling Mr Fazio by the affectionate nickname "Tonino", was detained late on Tuesday for financial crimes including suspected criminal conspiracy to embezzle and money laundering.

Leading newspapers called on Mr Fazio to quit and Standard & Poor's analyst Alberto Buffa di Perrero said "there is clear damage to the reputation and credibility of the Bank of Italy".

But Mr Fazio, who has already weathered an unprecedented stand-off with the government over his handling of a battle between Pop Italiana and Dutch bank ABN AMRO for Banca Antonveneta, said he had done nothing wrong.

"My conscience is clear, I have always applied the law correctly. If Fiorani has done something illicit, we have nothing to do with it," newspaper Corriere della Sera quoted Mr Fazio as saying after Mr Fiorani was arrested.

The Bank of Italy declined to comment. Mr Fazio, who has tenure as governor for life, could only be forced out by a Bank of Italy committee which recently gave him a vote of confidence.

"I can only repeat that institutionally the government has no means to put an end to the governor's mandate," Prime Minister Silvio Berlusconi said.

Mr Fazio was due to go to Frankfurt yesterday for a meeting of the European Central Bank. He was "extremely tense, shaken", according to Luigi Leone, secretary of the Falbi union which has criticised Mr Fazio.

It was not clear whether Mr Leone had met Mr Fazio.

The ECB last month criticised Italy's legal framework but stopped short of criticising Mr Fazio. However, recent reports that Mr Fazio accepted expensive gifts from Mr Fiorani could merit its renewed attention if they contravened the ECB's code of conduct. Both Il Sole 24 Ore newspaper and the Financial Times urged Mr Fazio to step down. "The only thing left for him to do is to step aside," Italy's biggest business newspaper, controlled by employers union Confindustria, said in a front-page editorial.