Bank of Italy chief defends regulator's role in Bari
bank crisis
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[December 23, 2019] MILAN
(Reuters) - The head of Italy's central bank rebuffed criticism of its
role in supervising struggling lender Banca Popolare di Bari and said in
an interview published on Monday that it was ready to account for its
actions.
Prosecutors in the southern Italian city of Bari are investigating the
former cooperative bank's chairman for alleged corruption in relation to
the central bank's supervisory activity, a judicial source said on
Sunday.
The Bank of Italy put Popolare di Bari, the biggest lender in the poorer
south of the country, under special administration this month and Rome
has agreed measures worth up to 900 million euros ($997 million) to prop
up the unlisted bank.
"Banking supervision has accomplished its duties with the highest effort
and, in my opinion, positively," Bank of Italy Governor Ignazio Visco
told Il Corriere della Sera newspaper in an interview published on
Monday.
"We are ready to account for our actions, as we have always done, at an
institutional level," he said.
The country's banking crisis has shone a spotlight on the Bank of
Italy's supervisory role and the ruling 5-Star Movement has called for a
reform of the how the central bank's top managers are appointed.
Visco said the central bank would, however, assess whether it had made
mistakes - when asked about Popolare di Bari's takeover of struggling
rival Tercas in 2014.
Critics say the deal accelerated Popolare de Bari's problems by
increasing its portfolio of bad loans.
Popolare di Bari's rescue is the latest episode in a string of banking
crises to hit Italy since 2015, costing the state and other Italian
banks some 23 billion euros.
Visco said some small banks in Italy were still "weak" and the Bank of
Italy was closely monitoring them.
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Bank of Italy Governor Ignazio Visco looks on during a meeting in
Rome, Italy, October 31, 2017. REUTERS/Remo Casilli/File Photo
"The problem is that we have an insufficient crisis management system. To manage
a crisis you don't just need to be able to forecast it, you need tools," he
said, without specifying what tools he was referring to.
"I've been asking for a long time for new rules to be established at the
European level" he said.
The Bank of Italy was not immediately available for comment.
Visco said the rescue plan for Popolare di Bari - which involves a depositor
guarantee fund financed by Italian banks and state-owned Banca del
Mezzogiorno-Mediocredito Centrale - aims to prevent depositors and bond holders
losing money.
But he suggested the cooperative bank's 69,000 shareholders, who are mostly
retail investors, could book losses.
"The industrial plan will define the amount needed for new capital, the way to
carry it out and the involvement of current shareholders," Visco said.
He said the plan would be open to other banks willing to join a larger financial
entity with an adequate size for the "new technological and competitive
environment".
($1 = 0.9024 euros)
(Reporting by Giulio Piovaccari; Editing by Himani Sarkar, Toby Chopra and David
Clarke)
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