Siniscalco goes, Fazio stays - why?

I have always found it diffilcult to comprehend how Italian politics work and how a government and president can survive that many blows and still look shiningly clean at the end of the day. This time the financial sector personified by its head Antonio Fazio is involved starring as the main attraction in a scandal over foreign bank takeovers which has gone all the way up into the political cabinet prompting, at least in part, the resignation of Italy's finance minister Domenico Siniscalco.

Lets start at the beginning ...

At the end of July this year, two banks from Spain and the Netherlands had to abandon their attempted shopping spree in Italy empty-handed after they had their bids turned down for Banca Nazionale del Lavoro (BNL) and Antonveneta respectively. At the offset nothing is wrong with this as in Italy, a bank fusion has to be approved by the central bank, and although it did smell of petty protectionism nothing was seemingly wrong - but little did we know that Mr. Fazio already had been making plans of his own ...

Consequently, the Italian bank Banca populare de Lodi stepped up and made a bid for Antonveneta and althougt the BPI's finances were no where in shape to acqurie another asset the approval was swiftly granted by the Central Bank -All in the familia eh?

And when transcripts were released in the media showing that Mr. Fazio and the BPI director Mr. Fiorani conversing friendly on the take-over deal the scandal was on its way.

See these two articles from the Economist for a full overview ...  - "Fazio under Fire"  and Italian banking scandal - Brothers in arms (warning; without subsription contents might be walled)

Usually when things like this happen heads must role and in this case you should think that Mr. Fazio would be the first to step up to the guillotine. Although an investigation is on its way and criminal charges seem plausible it is not certain who is going to be charged ... did Mr.Fazio know that the BPI was already under investigatio because of tampered budget statements and did his personal relationship with Mr. Fiorani had anything to say; there are strong evidence that the answer to these questions are yes, but Mr. Fazio still lingers. He has been under tough pressure by Italy's finance minister Domenico Sinisalco to resign but because of one of the parties in the ruling coalition has been taking Mr. Fazio's side the government has not wielded its powers against him. Now it has become too much for Mr. Sinisalco and he has chosen to resign - "I am not embittered, I am scandalised." -


See this Finance blog for other (non-walled :)) articles on this subject

Thursday evening, a day after the finance minister's departure Mr. Berlusconi came out of the bushes pushing for Mr. Fazio to leave office perhaps finally realising that something needed to be done.

In the financial sector the mess is slowly being mopped up - Mr. Fiorani has been suspended of his post at BPI and the bank is under investigation and the Dutch bank ABN Amro has finally been given permission to buy a 30 % stake in Antonveneta.

See this article (warning; without subscription contents might be walled) for a rap-up of this captivating tale of Italian politics which remain an enigma for the author of this Blog; non-walled copy of article can be found here.