ECB 'accuses' Fazio of breaching EU, Italian rules

The European Central Bank has accused Bank of Italy Governor Antonio Fazio of breaking Italian and EU rules in a takeover case that has prompted calls for him to quit, Italy's leading business newspaper reported yesterday.

The ECB declined to comment but the Bank of Italy denied the ECB had reached any definitive conclusions, and said it would provide new information that proved Mr Fazio had acted correctly in a case that has led to an institutional impasse in Italy.

Il Sole 24 Ore said in a front page article that the ECB's executive board had made the accusations in a five-page document sent to the central bank's 12-member governors.

According to the daily, the document says Mr Fazio "did not respect the Bank of Italy's own vigilance rules, the fundamental principles of Basel II and two European Union banking directives" in his handling of the cross-border takeover battle for Banca Antonveneta.

The ECB's executive board also questioned whether Mr Fazio had been impartial during the takeover fight that pitted local lender Banca Popolare Italiana against Dutch rival ABN AMRO, Il Sole said.

Italy's central bank said it was in "informal dialogue" with the ECB, which it said had not formulated any final conclusions.

"It is absolutely untrue that the ECB has given the Bank of Italy a conclusive opinion," the Bank of Italy said in a statement. "It is all the more groundless that any conclusive opinion could indicate that rules were broken."

The ECB declined to comment. "I cannot comment on either the article or the underlying documents," an ECB spokesman in Frankfurt said.

Rome prosecutors are investigating Mr Fazio for possible abuse of office in the Antonveneta saga and have accused him of favouring Pop Italiana, whose former CEO Gianpiero Fiorani is under investigation over possible financial crimes.

Both Mr Fazio and Mr Fiorani have denied any wrongdoing. On Monday Mr Fazio told Rome magistrates the Bank of Italy was justified in approving Pop Italiana's proposal to take over Antonveneta. Prime Minister Silvio Berlusconi and several government ministers have called on Mr Fazio to resign over the case, but Mr Berlusconi has chosen to take no formal steps to try to force the independent central bank governor to quit.

Italy's Senate yesterday rejected a proposal by the centre-left opposition calling on the central bank's Superior Council, the only body with the power to fire Mr Fazio, to revoke his mandate. Il Sole noted that the ECB, which has indicated it could not intervene even if it wanted to, could only put moral pressure on Mr Fazio.

The ECB has no power to force out a central bank governor but can exercise moral suasion on its members.