May 1, 2019 / 10:38 AM / 19 days ago

Italian cabinet approves central bank nominations; League promises reform

ROME, May 1 (Reuters) - The Italian cabinet has approved the nomination of Fabio Panetta as the Bank of Italy’s new deputy governor on Thursday and has confirmed the appointment of two new executive board members, the government said in a statement.

However, one of the two ruling coalition parties, the far-right League, said it continued to have reservations about hiring externally for the board and promised to put forward a reform plan for the central bank in the coming days.

The new hierarchy was announced by the central bank a month ago, but the appointments were only rubberstamped by the government at a late-night cabinet meeting on Tuesday.

Panetta, who was already on the 5-member board of the Bank of Italy, replaces Salvatore Rossi as number two to Governor Ignazio Visco. Rossi quit in March following political pressure for a clean-out of the central bank’s top brass.

Panetta is also a member of the European Central Bank’s Single Supervisory Mechanism which oversees euro zone banks.

Daniele Franco will leave his job as state accountant at the Treasury to replace Panetta as deputy director general, while Alessandra Perrazzelli, who has a background as a senior manager at Barclays and Intesa Sanpaolo, also joins the board.

“We have given a green light to the Bank of Italy, with reservations about the external appointments that do not take advantage of the many internal resources (at the bank),” a League source told reporters after the cabinet.

“In a few days the League will present a proposal for a Bank of Italy reform,” the source said, declining to be named and giving no details of the measures under review.

The leaders of the populist ruling coalition had pushed hard for the replacement of senior managers at the central bank, who they said had to pay for failing to prevent a spate of recent banking scandals in which thousands lost their savings.

The Bank of Italy has always said it acted correctly.

Italian President Sergio Mattarella approved in March the creation of a parliamentary commission to investigate possible failings by institutions, including the Bank of Italy, charged with oversight of the country’s troubled banking sector.

However, he also warned the government not to try to interfere with the independence of the Italian and European central banks, or other market supervisory agencies. (Reporting by Crispian Balmer; Editing by Alison Williams)

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