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     LONDON(MNI) - The Bank of Italy is expected to appoint two new deputy
governors on March 28 after a deal with the government to overcome tensions over
the renewal of the BOI's five-member board, MNI understands.
     One potential nominee is Daniele Franco, director of the Treasury's State
General Accounting Department and a former Bank of Italy official, who could
replace outgoing Senior Deputy Governor Salvatore Rossi, according to people
close to the BOI.
     With relations with the government strained, Rossi announced he wasn't
available for another six-year term after his mandate expires on May 9. The
senior deputy governor is second in command after Governor Ignazio Visco and
head of Italy's insurance authority IVASS.
     Rossi's move appears to have improved relations between the central bank
and the populist government.
     The 5-Stars Movement and League party have regularly attacked the Bank of
Italy since their campaigns for last year's election, calling for a renewal of
leadership they blame for "bad supervision" leading to bank failures. They also
want the Bank of Italy to work more explicitly for Italian interests within the
     Franco's departure from the Treasury serves a dual purpose. It would leave
a vacant chair for which Economy Minister Giovanni Tria has full power to
nominate a replacement closer to the government. Franco's appointment to the BOI
board would also acknowledge his work at the Treasury, despite his criticism of
the government's budget plan last year, but the populist coalition would rather
promote him to the BOI than keep him where he is, said the sources.
     A woman is set to be nominated to replace Valeria Sannucci, whose board
mandate also ends on May 9 and like Rossi won't run again. Several high level
academic or expert candidates have been vetted, according to sources familiar
with BOI thinking.
     Deputy Governor Luigi Signorini, whose future has been on the line since
his mandate expired in February, might be reconfirmed, they said.
     Governor Ignazio Visco and a fifth board member, Fabio Pannetta, are
secure. Visco was nominated for a second mandate in October 2017 by the former
center-left government while Pannetta was recently granted a fresh term,
apparently supported by both ruling parties. Pannetta, a member of the Single
Supervisory Mechanism's Supervisory Board who has called changes to EU rules on
bailing-in bondholders at failing banks and for easier timetables for reductions
in non-performing loans, could even succeed Rossi as senior deputy governor in
consideration of his ties with the ECB.
     The board of directors, comprising thirteen members elected by BOI
shareholders, designates deputy governors after a proposal from the governor,
which needs to be forwarded to the government for approval.
     Board members are jointly appointed by Prime Minister Giuseppe Conte and
the council of ministers, following a decree by head of state Sergio Mattarella.
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$E$$$,M$I$$$,M$X$$$,MT$$$$,MX$$$$,M$$EC$]