Bank of Italy not to blame for bank collapses, governor tells parliament

ROME (Reuters) – Bank of Italy Governor Ignazio Visco on Tuesday defended his record as a custodian of local lenders, telling parliament the collapse of numerous banks was not due to careless supervision but to a deep recession.

Addressing a special parliamentary commission, Visco denied the central bank had acted late in preventing scandals at a string of lenders or had underestimated the effect of the economic downturn on banks’ balance sheets.

“The marked deterioration of banks’ assets and the crises of recent years were above all the inevitable consequence of the deep, double-dip recession that hit the Italian economy,” he said.

The commission, which was set up in September to look into the collapse of 10 Italian banks in the past two years, has become a focal point of political campaigning ahead of a national election expected to be held in March.

The government reappointed Visco in October despite opposition from the ruling Democratic Party (PD) and its leader, former prime minister Matteo Renzi. His testimony has been eagerly awaited by politicians of all stripes.

Opposition parties, led by the anti-establishment 5-Star Movement and the right-wing Northern League, have attacked the PD for the banking scandals in which thousands of Italians lost their savings, while Renzi says the Bank of Italy should shoulder the blame.

In his introductory speech, Visco said the Bank of Italy had warned of the effects of the recession on the banking system as early as 2012.

In a spirited defence of the institution he has led since 2011, he argued that the central bank has limited scope to prevent bank scandals because its inspectors can only intervene when improper conduct at banks is already clear and established.

“In more than 120 years of our history … the honesty and integrity of the Bank of Italy’s staff has never been found lacking,” he said.

Economy Minister Pier Carlo Padoan said in his own testimony to the commission on Monday that in some cases in recent years the Bank of Italy’s supervision “could have been done better”.

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