MNI SOURCES: Italy PM Designates BOI Visco For 2nd Mandate

by Silvia Marchetti

     ROME (MNI) - Italian premier Paolo Gentiloni on Thursday signed a letter

indicating incumbent governor Ignazio Visco would be given a second 6-year

mandate, Market News learned from government sources.

     The letter has now been forwarded to the Bank of Italy's Board of Directors

for their opinion, which is not binding, with the response expected on Friday

morning at 0830CET. Once the board expresses their view, the candidate's name is

officially confirmed by the head of state Sergio Mattarella, who appoints the

new governor by presidential decree.

     Talking on Thursday on a pre-electoral train tour across Italy, former

premier Matteo Renzi criticised the renewal, saying he would have made a

different choice, but adding that Gentiloni is free to make his own decisions.

     Visco's mandate expires on October 31. The process of appointment does not

involve any sort of vote or election, but is purely made by joint designation by

the prime minister and the head of state, Sergio Mattarella. The premier

indicates just one name.

     Visco's position has been precarious. His chances narrowed two weeks ago

when the Lower House of parliament approved an 'anti-Visco' motion, presented

and backed by Renzi's Democratic Party, with 213 yes votes out of a total 315.

     Renzi, the front-runner for next year's general election, has more than

once criticized Visco for a lack of control in preventing several banking crises

that have rocked Italy.

     The Democrats' anti-Visco motion, which was criticized by former EU

Commissioner and Italian premier Mario Monti, formally asked the "government to

adopt useful initiatives to reinforce the efficiency of the bank's supervision

on the banking system to safeguard savers and to boost trust among citizens by

identifying, to such end, the most qualified figure able to ensure a renewed

confidence".

     Gentiloni's office responded saying that any choice made would solely be to

"guarantee the autonomy of the central bank".

     The government appears to have ultimately decided not to take into account

the Democrats' motion, concerned that replacing Visco at such a delicate moment

for Italy's financial sector could send a negative message to investors and

raise market instability.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$E$$$,M$I$$$,M$X$$$,MC$$$$,MX$$$$,M$$EC$,MGX$$$]