The Civitavecchia offices of Banca Etruria, one of four Italian lenders saved by a controversial government rescue, were searched by finance police on Wednesday.
The operation was conducted in relation to the suicide of Luigino D’Angelo, a pensioner who took his life in November after reportedly losing over 100,000 euros in bonds in the bank.
Prosecutors are investigating alleged fraud and instigation to commit suicide. The banks’ rescue has rocked the government, above all because Reform Minister Maria Elena Boschi’s father was a former vice president of Banca Etruria.
She survived a vote on a no-confidence motion last week but the centre-right has presented similar petitions against the whole executive over the case. The 3.6-billion-euro rescue, financed by healthy Italian banks, saved jobs and protected account holders, but shares and bonds in the four lenders are now worthless.
The executive has put Italy’s anti-corruption agency in charge of arbitrating claims for compensation for small investors, who say they were deceived by the banks about the risks of the bonds.
The government has said it could not do any more because the European Commission warned that offering greater protection to bondholders would breach of EU rules against State aid.
The Commission has denied this, but Premier Matteo Renzi’s government is reportedly considering releasing a confidential letter from Brussels showing that the EC set limits on Rome’s room for manoeuvre. The letter stated that the use of guarantee deposit funds in the rescue would be consider
However, Jonathan Hill, the European commissioner for financial stability and services, said that the Italian government “led the process and has responsibility” the rescue plan. At last week’s European summit, Premier Matteo Renzi described Hill’s words as “strange”, adding “we did what the Commission told us”.
The main criticism of Mr Renzi — who is otherwise known for his sharp political instincts — is that he botched the rescue by giving in to EU rules on state aid which prevented the government from protecting all Banca Etruria investors.
“The government could have done things differently,” says Alessandro Ghinelli, the recently elected centre-right mayor of Arezzo, speaking from his frescoed office in a 14th century palazzo. “We get infraction proceedings on everything from the EU so we should have had the balls — excuse my language — to get another one.”
Italian officials have stridently defended the terms of the rescue, saying it was the best option available.
“The reality is there were EU rules and we had to respect them,” Mr Renzi told the FT this week, saying the European Commission sent a letter outlining what it could and could not do.
“Without this [rescue] decree there would have been insane chaos,” Mr Renzi said in a separate radio interview last week. “A monument should be made to the government for this.”.
Meanwhile, the government has set up a fund worth about €100m to help compensate the hardest hit victims of the rescue and damp some of the increasingly vocal protests.
The Banca Etruria case has also revived worries about the health of the Italian banking sector, which remains saddled by more than €200bn of non-performing loans (NPLs) and has barely started to increase lending again after the end of a bruising triple-dip recession. It has also raised questions about the effectiveness of regulators at the Bank of Italy and Consob, the stock market regulator. Italian officials have defended the solidity of their banks and the work of their regulators, and pointed to new reforms of small bank governance.
“We’re now a new bank. We’re now a solid bank, and we have no NPLs, which means complete tranquillity,” says Roberto Bertola, its new chief executive.
FT, ANSA
Edited: Y Xamonakis
