Italian Premier Silvio Berlusconi wants Bank of Italy Governor to resign

Embattled Bank of Italy Governor Antonio Fazio appeared more isolated Friday after Premier Silvio Berlusconi joined calls for his resignation and named one of the governor's fiercest critics as the new economy minister.

"Berlusconi shows Fazio his distrust," was the banner headline of Rome daily La Repubblica.

The premier had so far remained largely neutral in the controversy surrounding Fazio, who is accused of discriminating against a Dutch bank in a takeover battle, the AP informs.

On Thursday, after the economy minister resigned amid a standoff with the governor, Berlusconi said Fazio's staying in office "is inappropriate and incompatible with Italy's international credibility."

"I hope the Bank of Italy governor makes the decision to resign," the premier said during a TV show late Thursday.

The Bank of Italy governor is appointed for life, and the government cannot force him out.

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 media suggested Fazio favored the Italian bank's bid. Fazio denies wrongdoing, and has resisted widespread calls for his resignation, the AP says.

Berlusconi's remarks came at the end of day of political turmoil.

Domenico Siniscalco, who had unsuccessfully tried to oust Fazio, handed his resignation as economy minister in the early hours of Thursday. He was quickly replaced by his own predecessor, Giulio Tremonti.

The two were both in Washington on Friday to represent Italy at meetings of the Group of Seven and the International Monetary Fund.

"I'll ignore him (Fazio) completely," daily Corriere della Sera quoted Tremonti as saying as he was leaving for Washington hours after his appointment.