In the balance

Last year, Legal Business wrote optimistically about a bright new dawn for Italy. The painful scars of banking, corporate and political scandals involving Antonio Fazio, governor of the Bank of Italy, Parmalat and Silvio Berlusconi were slowly beginning to heal. Romano Prodi’s new government had, against the expectations of many, lasted more than six months, and was promising a far-reaching and much-needed economic liberalisation programme to boost competition and encourage foreign investment. Meanwhile Mario Draghi, a former vice-chairman of Goldman Sachs, had just seen out his first 12 months as the new governor of the Bank of Italy. Things were looking up.

However, one year on, Italy is in trouble again. The government recently had to deal with a scandal involving serious allegations of misuse of public funds, and is widely regarded as incompetent and divided (see box, ‘A note on scandals’, page 68). Meanwhile, the finance and banking industry is having to contend with the effects of the US subprime mortgage meltdown, while some of the top domestic firms have suffered significant partner losses. Looking ahead into 2008, is there any reason to be optimistic?

Amidst the turmoil, the merger of the Milan Stock Exchange (Borsa Italiana) with the London Stock Exchange in June 2007 was one positive development – financial business is expected to grow as a result. Draghi’s appointment as governor of the Bank of Italy also seems to have paid off. The Bank has surrendered its right to be consulted in advance on takeovers, which allowed ABN Amro to become the first foreign financial institution to take over an Italian bank – Banca Antoniana Popolare Veneta, or Antonveneta (see ‘Forza Italia!’, LB170, page 72).

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