July 17, 2012 / 10:38 PM / 5 years ago

Draghi gave evidence at Italy rating agencies probe

MILAN (Reuters) - Former Bank of Italy chief Mario Draghi spoke of a "conflict of interest" within rating agencies in an early 2011 testimony to magistrates as part of an inquiry prompted by Moody's downgrade of Italian banks in May 2010, local media said on Tuesday.

Prosecutors are still looking into a raft of downgrades by global credit agencies S&P, Fitch and Moody's for debt-laden Italy between 2010 and 2012 that triggered a sell-off of Italian assets and fuelled criticism of the agencies.

Draghi, now at the helm of the European Central Bank, gave a testimony to magistrate Michele Ruggiero on January 24, 2011 in Trani in southern Italy, while he was still Bank of Italy governor, according to Mediaset television channel Canale 5.

According to Canale 5, Draghi told magistrates that the increased volatility of bank shares was a consequence of the agencies' valuations. He also said that the reputation of the three rating agencies had diminished after they made some wrong assessments during the subprime crisis.

A person familiar with the situation confirmed to Reuters that Draghi spoke to Italian magistrates in connection with the probe, which is still in progress.

The Bank of Italy and the European Central Bank were not immediately available for comment. (Reporting by Lisa Jucca; Editing by Louise Ireland)

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