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UPDATE 1-Norway finmin summons central bank chief over wealth fund crisis

* Finance committee says minority govt must break deadlock

* Sets out conditions for Tangen to take job on Sept. 1

* Central bank board and Tangen to meet Monday (Recasts with end of meeting, quotes from central bank chief, finance minister, detail)

OSLO, Aug 21 (Reuters) - Norway’s finance minister on Friday met with the central bank governor to try to defuse a crisis over the appointment of a wealthy businessman to run the country’s $1.1 trillion sovereign wealth fund, the world’s largest.

Norges Bank said in March that Nicolai Tangen would become CEO of Norway’s rainy-day assets from Sept. 1 while maintaining his own 43% stake in a hedge fund, triggering a backlash from a public watchdog and from parliament.

Tangen’s ownership in London-based AKO Capital posed a potential conflict of interest even though the hedge fund stake would be placed in a blind trust, parliament’s finance committee said.

Tangen has ruled out divesting his stake in AKO, which he founded.

The minority government takes its instructions from parliament as Norway is a parliamentary democracy. The central bank, which runs the wealth fund, is independent of the government.

“This is a serious case that affects the trust and reputation of the fund,” Finance Minister Jan Tore Sanner told reporters after the meeting, alongside Governor Oeystein Olsen.

“It was important for me to clarify parliament’s expectations, my expectations and the way forward,” said Sanner.

The central bank’s board will meet on Monday to discuss the situation with Tangen, Olsen told the same news conference.

“Tangen is still very motivated to do this job and this (the ongoing situation) has strengthened his motivation,” Olsen said. Asked whether he, Olsen, had considered resigning, the governor said he had not.

Tangen declined to comment when contacted by Reuters.

DEADLOCK

The unprecedented deadlock between the central bank’s executive board and its watchdog, known as the supervisory council, must be broken by the government, a finance committee in parliament said in a unanimous opinion earlier on Friday.

The committee said Tangen cannot have holdings or interests that could create or appear to create conflicts of interest with the oil fund and “weaken the fund’s reputation and trust”.

Secondly, Tangen cannot have holdings or interests that weaken, or can weaken, the “oil fund’s work on tax and transparency”.

Finally, “these conditions must be in place before he (the new CEO) takes up his job,” Hadia Tajik, a lawmaker from the opposition Labour party and a member of the finance committee, told reporters.

Finance Minister Sanner said he saw “room for manoeuvre” in the position taken by the finance committee, without saying what form a resolution could take. (Editing by Hugh Lawson and Barbara lewis)

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