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Last Updated: Thursday, 22 September 2005, 17:50 GMT 18:50 UK
Italy economy minister resigns
Domenico Siniscalco
Mr Siniscalco was worried about the Bank of Italy's standing
Italy's Economy Minister Domenico Siniscalco has resigned in protest at the handling of a banking scandal.

He was an outspoken critic of central bank governor Antonio Fazio whose resignation he had sought.

Mr Fazio was at the centre of controversy over his role in blocking the takeover of Banca Antonveneta by rival Dutch bank ABN Amro.

Prime Minister Silvio Berlusconi on Thursday called for Mr Fazio to resign, saying Italy's credibility was at risk.

Mr Fazio "is not compatible with national credibility. His presence is no longer appropriate," Mr Berlusconi said.

Mr Siniscalco was replaced as economy minister by deputy prime minister Giulio Tremonti.

The Italian government recently announced plans to reform the central bank but refused to force Mr Fazio out.

'Scandalised'

Mr Siniscalco argued that the Bank of Italy's international standing had been damaged by allegations of bias in its handling of the takeover battle for Banca Antonveneta.

I couldn't take it anymore
Domenico Siniscalco

The Central Bank approved Banca Popolare Italiana's takeover offer for its Italian rival even though the bid was later suspended, and Popolare's chief executive Gianpiero Fiorani was forced to resign following allegations of insider trading.

Mr Siniscalco had called on Mr Fazio to resign after details of leaked conversations revealed that he had tipped Mr Fiorani off about the Bank of Italy's decision to clear the bid.

"Honestly, I couldn't take it anymore," Mr Siniscalco was quoted as telling La Repubblica newspaper.

"The problem isn't Fazio but [the government] which is incapable of resolving the problem. For this I am not embittered, I am scandalised."

Antonio Fazio
Antonio Fazio has become a divisive figure in Italian politics

Mr Siniscalco's resignation is hugely embarrassing for Prime Minister Berlusconi, coming ahead of next year's general election at which the economy will be a crucial issue.

Mr Fazio, who was appointed for life, has been staunchly supported by the Northern League, one of Mr Berlusconi's coalition partners.

He has denied any wrongdoing.

Despite the growing crisis over his position, Mr Fazio is expected to attend the annual meeting of the International Monetary Fund in Washington DC, which begins on Saturday.

Budget battle

Mr Siniscalco, an economics professor who is not a member of any political party, was only appointed last year.

It has been reported that he was also unhappy about opposition to his budget proposals from within the centre-right governing coalition.

He proposed measures to cut Italy's growing budget deficit by 21bn euros - plans which some members of the coalition believe could hurt its re-election chances.


SEE ALSO:
Bank of Italy 'must be changed'
14 Sep 05 |  Business
ABN Amro 'wins Italy bank battle'
15 Sep 05 |  Business
Italy's BPI falls as boss quits
19 Sep 05 |  Business
Italy bank chief 'will not quit'
05 Sep 05 |  Business
Italy bank chief urged to resign
04 Sep 05 |  Business


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