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Last Updated: Tuesday, 11 October 2005, 04:14 GMT 05:14 UK
Antonio Fazio: Italy's embattled banker
By Jon Cronin
BBC News business reporter

Italy's controversial top banker Antonio Fazio is known for his stubborn side.

Bank of Italy governor Antonio Fazio
Once seen as a safe pair of hands, Mr Fazio is mired in controversy

Journalist Marco Zatterin remembers the career banker fending off his questions long before Mr Fazio was appointed governor of the Bank of Italy.

"We were standing outside a building in Rome and talking about interest rates," says Mr Zatterin, economics editor of Italy's La Stampa newspaper.

"I was trying to discover whether the Bank of Italy was planning to raise interest rates. I was trying to push him and he talked to me for 40 minutes about any other subject. As my questions became more elaborate, his answers became more elaborate."

Mr Fazio's single-mindedness has been sorely tested in recent months.

The head of Italy's central bank has been embroiled in a banking scandal which has rocked his country's political establishment and led to numerous calls for his resignation, not least from Prime Minister Silvio Berlusconi.

Telephone tap

On Monday, Mr Fazio spent the best part of five hours being questioned by magistrates investigating his handling of Banca Popolare Italiana's (BPI) failed attempt to buy fellow Italian bank Antonveneta.

It's very unlikely that he will resign in the short term - if he did, it would be like saying he's guilty
Marco Zatterin, La Stampa economics editor

He is alleged to have favoured BPI's bid to buy Antonveneta over a rival cross-border offer from Dutch bank ABN Amro, in March.

Leaked transcripts of a phone-tapped conversation suggest that Mr Fazio was planning to keep Antonveneta in Italian hands by blocking ABN's bid, despite advice from his own officials that BPI was in no condition to mount a takeover.

The scandal has so far claimed the jobs of Italy's former economy minister and the boss of BPI.

But despite intense pressure for him to quit, Mr Fazio has denied any wrongdoing and is steadfastly refusing to step down.

Italy's foreign minister Gianfranco Fini has described Mr Fazio's behaviour as "inexplicable and unjustified", while Mr Berlusconi has said the governor's actions are "not compatible with national credibility".

But Italy's government says it is powerless to remove Mr Fazio who, under Italian rules, is entitled to keep his job for life.

Devout Catholic

Last week, the Italian Senate approved plans to limit future terms of office for Bank of Italy governors to seven years, although any change in the law will not apply to Mr Fazio.

Italian Prime Minister Silvio Berlusconi
Italy's PM says he's done all he can to encourage Mr Fazio to quit

And despite the political maelstrom surrounding Mr Fazio, who was embarrassingly stripped of his right to speak for Italy at a recent International Monetary Fund meeting in Washington, the central bank governor still has his allies.

The right-wing Northern League, a junior member of Mr Berlusconi's government, has called for Mr Fazio to stay, while the Roman Catholic Church has expressed support for the banker. Mr Fazio makes no secret of his devout Catholicism.

Most crucially of all, Mr Fazio has the backing of the Bank of Italy's 13-member board of directors, the only body in the country with the legal power to fire him.

But onlookers say that the scandal is damaging Italy's standing internationally.

"This painful affair is eroding Italy's credibility on a daily basis," said the European Commission's former competition commissioner Mario Monti recently.

"It is damaging," says Mr Zatterin. "If a bank from abroad makes an offer for an Italian bank they will have all sorts of suspicions. There are lots of doubts about the way rules and regulations are applied in Italy now. That is a real problem for Italy."

Safe hands

Mr Fazio has not always been regarded as such a controversial figure.

Born in 1936 in the small town of Alvito, south of Rome, he graduated with a degree in economics from Rome University and joined the Bank of Italy in 1960.

A family man with five children, Mr Fazio secured a reputation as a serious and respected banker on his journey to the top, and was considered a safe pair of hands when appointed governor in 1993.

He maintained the image of the Bank of Italy as an incorruptible institution, steering it through the notoriously choppy waters of Italy's political scene.

Although a Eurosceptic, Mr Fazio even ensured his country was ready (at least on paper) to ditch the lira and adopt the euro in 1999.

Enemies within

In recent years, though, Mr Fazio has shown himself as an opponent of foreign takeovers of Italian banks, despite European Commission efforts to make cross-border mergers easier.

Meanwhile, his increasingly abrasive manner has ruffled feathers in government. The Italian minister who humiliated him at the Washington IMF gathering, Giulio Tremonti, is an old enemy.

But Mr Fazio's stubbornness in the face of his critics remains intact, and few expect an appearance before investigating magistrates on Monday to shake him.

"It's very unlikely that he will resign in the short term," says La Stampa's economics editor. "If he did, it would be like saying he's guilty."

And with national elections due next year, there is a chance that Mr Fazio will remain in office longer than some of his most outspoken critics.

"He may outlast Berlusconi," says Mr Zatterin.

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