Fazio bows out of EU talks

Italy's central bank governor Antonio Fazio decided yesterday to skip a potentially embarrassing meeting of European Finance Ministers as pressure mounted on him to quit over a bank takeover scandal.

The Bank of Italy said Mr Fazio, in his first public concession since the scandal erupted in July, would miss the Ecofin meeting starting today in Manchester and send one of the bank's deputy director-generals instead.

The meeting would have awkwardly paired him with Economy Minister Domenico Siniscalco, one of three senior Cabinet ministers who have called for Mr Fazio to step down.

Politicians and newspapers had urged Mr Fazio not to go to Manchester to spare Italy the embarrassment of having a central bank governor and an economy minister at daggers drawn on the same international stage.

"This will thus prevent the risk that repercussions from internal matters would in any way affect a European meeting attended by an Italian delegation," a bank statement said, acknowledging the uproar over the takeover scandal. But the decision left the greater question of Mr Fazio's future in the balance. The head of Italy's independent central bank since 1993 has an open-ended term, and the government cannot order him to step down.

Opposition leader Romano Prodi shrugged off Mr Fazio's move, making it clear that he didn't consider it a huge concession. "It doesn't seem like such a big announcement to me. That's not the problem," he told journalists.

The 68-year-old governor is accused of showing bias against Dutch bank ABN AMRO and favouring Italy's Banca Popolare Italiana in a takeover battle. The Wall Street Journal Europe yesterday joined an array of newspapers calling on Mr Fazio to resign. "Please. Just go," it said, adding, "Tuscany's a nice place to retire."

Mr Fazio has denied any wrongdoing and the government has been unable to make a unified move against the governor.

Though three senior ministers have spoken out against Mr Fazio and yesterday, Agriculture Minister Gianni Alemanno called the governor's decision to skip Ecofin a mere "palliative", Prime Minister Silvio Berlusconi has adopted a neutral stance.