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Western EuropeSeptember 4 2005

Italy’s banking sector is mired in scandal

Bankers and journalists were busy in August speculating on the future of the Bank of Italy, the Banca Popolare Italiana (BPI, until recently Banca Popolare di Lodi), the Banca Antoniana Popolare Veneta (Antonveneta) and the Banca Nazionale del Lavoro (BNL).
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Publication of transcripts of telephone conversations between businessmen and bankers, some involving central bank governor Antonio Fazio, added spice to the speculation.

Magistrates had ordered phone taps of people under criminal investigation in connection with BPI’s controversial bid for Antonveneta, for which Dutch giant ABN AMRO had made an offer. Some conversations also involved large shareholders in BNL, for whose ownership Spain’s BBVA was bidding. Since the phone tap revelations on dubious dealings and questionable relationships in Italian business and banking, BBVA has said it is no longer interested in BNL.

When the BBVA offer for BNL failed, Unipol – a smallish Italian insurer, which sees buying BNL as a way to develop a bank-insurance group – made a bid. However, this has raised doubts: one about the validity of the bank-insurance, cross-selling model; another about Unipol’s articles of association; and a third about the financial backing it needs to buy a bank several times its size.

A question mark also hangs over the purchase of BNL shares by stock market raiders, including some who were involved in what stock market regulator Consob ruled was a concert party, which helped BPI’s bid for Antonveneta.

Unipol submitted its draft prospectus to Consob on August 16 and other developments were expected as The Banker went to press. But the outcome is far from predictable.

ABN AMRO’s bid for Antonveneta seemed doomed in the first week of May but has been revitalised by judicial action in Milan.

That BPI’s chief executive was heard in a tapped phone conversation to tell Mr Fazio that news of the approval of his bank’s bid for Antonveneta had given him goose pimples and that he wanted to kiss Mr Fazio on the forehead suggests an unconventional relationship between supervisor and supervised.

Changes are clearly needed and some seem likely in the coming weeks. They should provide part of the answer to how and when the scandal will end – but only part.

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Read more about:  Analysis & opinion , Western Europe , Italy