Magazine article Newsweek International
Byline: Jacopo Barigazzi
The latest blockbuster Italian scandal is a bit unusual, in that it was made largely in Europe. That, in any event, is the impression in Milan financial circles, which attribute the recent fall of Italy's all-powerful central banker, Antonio Fazio, not only to aggressive prosecutors but also to his plan to prevent European banks from buying Italian banks. Now, following pressure from Dutch and Spanish banks, backed loudly by the European Union, Fazio is out. Last week he was replaced by Mario Draghi, 58, heralding a new, more open era in Italian banking.
Europe won, but most Italians are cheering. Fazio's problems began last summer with charges that he had improperly intervened to block takeover bids by ABN AMRO of the Netherlands and Banco Bilbao Vizcaya Argentaria (BBVA) of Spain, and mounted with accusations of insider trading and abuse of office. He had become a symbol of Italian provincialism. Now Draghi is welcomed as the right man to restore credibility. A former Treasury official who moved to London to become a vice chairman of Goldman Sachs International, Draghi is the father of the great privatizations of the '90s, from oil company Eni to Telecom Italia. He drafted the 1998 legislation known as the Draghi Law that set rules on corporate governance and company takeovers. And he is no enemy of Europe. "He took part in a famous meeting on the [royal yacht] Britannia where big international banks reached an agreement to privatize the Italian [economic] system," recalls Giuseppe Oddo, coauthor of a book, "The Intrigue," on Fazio's reign at the central bank.
Fazio was part of an old elite that sees foreign banks--especially those that want to buy Italian banks--as "Europeans at the gate." But his countrymen already have much more modern ideas. The Fazio scandal led to changes in the law last year that, among other reforms, stripped the chief central banker of lifetime tenure. Fazio stepped down Dec. 19, and since then the Milan bank-share index has been on the rise, reaching the year's peak on the 29th, as investors bet on a new wave of consolidation, mainly among big banks--although analysts warn that many of these institutions are controlled by shareholders' pacts that could deter foreign bidders. "The financial scene will be surely more open," argues Gianluca Verzelli, director of investments at BNP Paribas in Milan. The most mentioned takeover targets are Turin's Sanpaolo IMI, the third largest bank in Italy, in which Spain's Banco Santander already owns an 8 percent stake, and Banca Intesa, the second largest, in which France's Credit Agricole holds an 18 percent stake. …