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Italy rejects bid to oust minister over banking scandal

ROME (Reuters) - Italy’s lower house of parliament on Friday rejected a bid to oust one of Prime Minister Matteo Renzi’s closest allies over an alleged conflict of interest in a banking scandal that wiped out the savings of thousands of retail investors.

Italy's Minister for Constitutional Reforms and Parliamentary Relations Maria Elena Boschi talks during a debate at the Italian Senate in Rome October 13, 2015. REUTERS/Remo Casilli

The Chamber of Deputies voted 373 to 129 against the motion of no confidence in Reforms Minister Maria Elena Boschi, a 34-year-old lawyer who is one of the stars in Renzi’s centre-left Democratic Party.

The anti-establishment 5-Star Movement presented the motion, saying Boschi should step down because of her family ties to one of four banks the government saved from collapse last month.

“This has totally backfired on the 5-Star Movement,” Renzi told reporters in Brussels.

Renzi has a solid majority in the lower house and Boschi’s victory was widely expected. But the debate has kept attention focussed on the affair, and the opposition says it will present a motion of no confidence in the entire government next week.

Boschi, who is responsible for an overhaul of Italy’s constitution that is moving through parliament, has faced scrutiny because her father was on the board of one of the stricken banks, Banca Etruria, and she held shares in it.

Boschi denied that her ties to the bank influenced government policy in any way. If her father made any mistakes, she said, then he should be held to account.

“I am proud of being part of a government that subscribes to a very simple concept. He who makes a mistake must pay. Whoever it is, without exception,” she said.

The government salvaged Banca Marche, Banca Etruria, CariChieti and CariFe at the end of November, using 3.6 billion euros (2.6 billion pounds) from a crisis fund that was financed by healthy Italian banks.

However, shareholders and holders of junior debt took heavy losses, which Renzi said was inevitable because of new European Union rules aimed at shielding taxpayers in bank rescues.

“Did Renzi’s government ... favour the bank interests? The answer is evidently ‘yes’,” said M5S’s Alessandro Di Battista. “Minister Boschi has a conflict of interests that is not as big as a house but as big as a bank.”

Boschi said her father had been on the bank board for barely 10 months before being forced out when the government put the flailing firm under administration in February.

She said neither she, nor any member of her family had traded their modest shares in Banca Etruria since she entered the cabinet last year, so their holdings were now worthless.

“I have never favoured my family, I have never favoured my friends. There is therefore no conflict of interest, no favouritism,” she said, to loud applause from centre-left ranks.

Additional reporting by Gavin Jones and Isla Binnie, editing by Larry King