ROME Feb 1 Italy's head of state defended its
central bank against charges it had failed in its oversight of
Monte dei Paschi di Siena, warning that national
interests were at stake in the debate over the troubled lender.
In an interview in Friday's edition of business daily Il
Sole 24 Ore, President Giorgio Napolitano noted the Bank of
Italy had provided parliament with details of the steps it had
taken to warn Monte Paschi of the problems it faced.
"It scrupulously documented how, from the very beginning and
with its traditional rigour, the Bank of Italy exercised its
supervisory functions within the limits of the powers given to
it by the law," he told the newspaper.
He said that it was necessary to bring clarity to the
affair, which has shaken Italy's third-largest bank and raised
questions over the oversight of the country's banking system but
said all sides "should be aware of the national interest".
The Bank of Italy faces criticism of its supervision of the
540-year-old institution from Siena and of its role in approving
a government bailout last week, despite repeated warnings dating
back to at least 2009 that the bank's financial position risked
sliding out of control.
It was led at the time by Mario Draghi who has gone on to
head the European Central Bank.
The scandal over opaque derivatives contracts which have
left the world's oldest bank facing losses of 720 million euros
and dependent on state aid has jumped to the top of the
political agenda, only weeks before Italians go to the polls in
a general election on Feb. 24-25.
The interview in Il Sole 24 Ore, the traditional house
journal of Italy's business establishment, underlines the
growing alarm over the damage which the Monte Paschi case could
cause to the country's image with international investors.
The Bank of Italy has said it did everything it legally
possible to warn of problems which began piling up in the wake
of Monte Paschi's 9-billion-euro cash acquisition of smaller
rival Antonveneta just before the 2008 global financial crisis.
The management at the time has been replaced and prosecutors
are investigating accusations ranging from bribery linked to the
Antonveneta acquisition to accounting malpractice over the
But questions remain over how problems, which were already
known at least in part to both Bank of Italy regulators and the
bank's own internal auditors as early as 2009, were made public
only last week.
Prosecutors are already considering complaints from consumer
organisations that the central bank failed in its regulatory
duties and there has been mounting scrutiny over Draghi's role.
The tight links between the bank and the regional
politicians who dominate the shareholder foundation which
controls it have also been widely highlighted and led to bitter
exchanges between the main parties.
The centre-left Democratic Party (PD), which has seen its
longstanding opinion poll lead eaten away by the scandal, has
been most under fire because of its dominance of the local
governments in Siena.
But the PD has shot back with accusations that other parties
are using the scandal for political ends and saying the party as
a whole has nothing to do with the bank.
(Reporting By James Mackenzie; Editing by John Stonestreet)