Italian PM Silvio Berlusconi won't punish Bank of Italy governor

Premier Silvio Berlusconi said Friday that his government would not take steps to oust the embattled Bank of Italy governor, who has resisted calls for his resignation following accusations of bias in a bank takeover battle.

Berlusconi said that only the European Central Bank can intervene in the controversy that has been surrounding Bank of Italy chief Antonio Fazio, the AP says.

"The government has no power in the matter; the Bank of Italy is an independent and autonomous institution," he said. "Only the European Central Bank can intervene."

The ECB said it had no immediate comment regarding Berlusconi's remarks.

When asked about the Fazio issue last week after its monthly meeting of the Governing Council, bank President Jean-Claude Trichet commented that the ECB governing council code of conduct was voluntary and had no legal status.

Berlusconi pointed to a reform of the Bank of Italy that has been recently passed by the Cabinet, and said, "I don't think the government must take further steps."

The remarks came amid news reports that his Cabinet was looking to oust Fazio through a parliamentary motion of no confidence worked out with center-left opposition parties.

The government cannot directly oust the central bank governor, a position designed with an open-ended term to avoid political interference. A motion would increase the pressure on Fazio to step down.

Several prominent members of the government have called for Fazio's resignation, but the central banker has shown no sign of caving in.

Analysts say Fazio should resign if it is clear that he doesn't have the full support of the government. Critics also say his resignation would restore credibility to the Bank of Italy, whose image has been damaged by the controversy.

The accusations against Fazio center on his handling of a struggle between Banca Italiana Popolare Scarl and Dutch rival ABN Amro Holding NV for control of Banca Antonveneta SpA. Wiretapped conversations published in the Italian press suggested Fazio favored the Italian bank's bid.

Fazio has insisted he acted correctly, but support for him in Italy's center-right coalition has crumbled recently. He decided to skip a gathering of European finance chiefs Friday and Saturday to prevent the controversy from disrupting the meeting.

The Bank of Italy reform recently approved by the Cabinet includes a seven-year, nonrenewable term for the governor. Fazio is not affected by that change.

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