Italy's Banking Chief Is Under Fire
Opponent of Foreign Buyouts Of Local Banks Scrutinized For Role in Antonveneta Bid
By GABRIEL KAHN and SABRINA COHEN
Staff Reporters of THE WALL STREET JOURNAL
July 28, 2005; Page A9
Italian central banker Antonio Fazio has long been one of the most powerful and controversial public figures in Europe. Now, a brouhaha over his role in an international takeover battle threatens his grip on banking in the world's sixth-largest economy.
The 68-year-old Mr. Fazio, governor of the Bank of Italy since 1993, has surfaced in wiretaps and documentation obtained by prosecutors who are investigating possible securities-law violations at an Italian bank. The material appears to demonstrate that he played an active role in trying to beat back a takeover bid by ABN Amro Holding NV of the Netherlands for an Italian lender, Banca Antonveneta SpA.
ABN Amro bid in the spring for Antonveneta, but a counterbid quickly emerged from a rival, Banca Popolare Italiana Scarl, formerly known as Banca Popolare di Lodi. BPI's bid raised eyebrows because BPI has a market capitalization just one-third Antonveneta's. On Monday ABN Amro said its bid had failed.
In the transcripts of one phone call, BPI Chief Executive Gianpiero Fiorani complains to Mr. Fazio that Italian stock-market regulator Consob was being "hostile" toward his bid, according to a copy reviewed by The Wall Street Journal.
In another conversation, according to the transcript, Mr. Fazio asks Mr. Fiorani to visit him at the Bank of Italy headquarters to discuss certain matters and tells him to use a side entrance. In a transcript from a late-night conversation, Mr. Fazio tells Mr. Fiorani that he has just given his personal approval to the takeover bid.
As governor of the Bank of Italy, Mr. Fazio is the chief regulator of the nation's banking and credit system. He hasn't been accused of wrongdoing nor has he been named a subject of the investigation, according to people familiar with the probe, though one of his top lieutenants has been named as a subject of the probe. But the evidence prosecutors have amassed of his close ties with a major bank's chief executive is breeding unease throughout the Italian banking sector.
Calls for him to step down have come from politicians, a consumer association and the Bank of Italy's major employee union. Mr. Fazio, who holds a lifetime appointment, has given no indication that he would resign as a result of the controversy.
Representatives of Mr. Fazio didn't respond to requests for comment for this article. The Bank of Italy, in a statement, maintained that it has acted properly and impartially in the Antonveneta deal. A spokesman for Mr. Fiorani declined to comment.
Mr. Fazio's fate could have big implications for the European banking industry. He is widely perceived as a main opponent of allowing foreign banks to buy lenders in Italy, the euro zone's third-largest economy, and thus an impediment to the emergence of a truly unified financial market in Europe. If he were to leave, it could lead to a crack in the walls that have protected Italian banking. That could prompt foreign banks to attempt a new wave of takeovers in Italy, said Armin Polster, a banking analyst with Deutsche Bank.
In interviews, several people who have worked with him say Mr. Fazio is convinced that Italian banks must remain in local hands to be truly responsive to the needs of the Italian economy. When ABN Amro last spring announced its intentions to bid for Antonveneta, it was seen as an assault on Mr. Fazio's power.
[Cross-Border Courtships]
Prosecutors have compiled some materials that indicate Mr. Fazio personally intervened to make sure BPI's rival bid for Antonveneta, valued at as much as €8.5 billion ($10.2 billion), was approved. BPI, in order to finance its takeover plans for Antonveneta, had to raise billions in new capital. Even then, BPI risked dipping below the minimum levels of core capital -- the amount of capital a bank holds to support its lending -- required by the Bank of Italy.
The Bank of Italy's own oversight body began to examine whether BPI had the wherewithal to take over Antonveneta. Two Bank of Italy regulators declared that BPI's bid was inadequately financed, and they refused to approve it, according to people familiar with the investigation. Testimony from witnesses and documentation obtained by prosecutors, according to the people familiar with the investigation, indicates that Mr. Fazio then personally overrode that decision. He appointed three outside experts to evaluate the offer, all of whom gave their assent, said the individuals familiar with the probe. After that, Mr. Fazio personally signed the document that gave the go-ahead to the BPI offer.
Shortly thereafter, according to transcripts of the wiretaps reviewed by the Journal, he called Mr. Fiorani on his cellphone to tell him the news.
"Ah, Tonino, I'm moved," says Mr. Fiorani in response, using a nickname for Antonio, Mr. Fazio's first name. He adds that he has "goose bumps," according to the transcripts. "I'd give you a kiss right now, on the forehead, but I can't...I know how much you have suffered, believe me, I've suffered too...."
Some colleagues of Mr. Fazio at the Bank of Italy complain that the Antonveneta affair indicates how the institution's role as independent regulator has been tarnished by the governor's management style. "He runs this place in a monarchic, autocratic fashion, as if it were his family business," said Angelo Maranesi, a 32-year Bank of Italy veteran and the head of one of its employee unions. "The governor's behavior shows that, in some cases, he has become personally involved in these affairs. This has damaged the image and the name of the Bank of Italy."
The Bank of Italy long was one of the most prestigious institutions in a country beset by corruption. A Mussolini-era law vested the governor with strong powers in regulating the financial system. In 1993, when much of Italy's political class was wiped out in a corruption scandal, one of the few public figures left untainted was Bank of Italy governor Carlo Azeglio Ciampi, who was tapped as an emergency prime minister. Mr. Ciampi is now the country's president. His successor as governor was Mr. Fazio, a career Bank of Italy economist.
As foreign banks complained that Mr. Fazio was working to block their access to the Italian market, the European Union began to monitor the Bank of Italy's moves. But the EU was unable to exert significant pressure on Mr. Fazio. Even now, with political pressure mounting for Mr. Fazio's resignation, the governorship's clout makes it difficult for the government to begin any procedure that could lead to his removal.
Fazio era quello che all'indomani delle ultime elezioni politiche disse: "Finalmente ci sono le premesse per una grande ripresa economica" (o giù di lì).
Era in mala fede, era (è) incompetente o porta solo sfiga?