Edited from Bloomberg News
Mario Draghi, a vice chairman of Goldman Sachs Group, Inc., and former Italian treasury official was named head of the Bank of Italy. Draghi, a former economics professor who earned a doctorate at the Massachusetts Institute of Technology, led a group of Italian Treasury officials known as the Draghi boys that oversaw $105 billion of asset sales betwen 1991 and 2001. He managed the sale of stakes in companies such as Telecom Italia SpA and Eni SpA, in a bid to boost competition and reduce the debt so Italy could qualify for Europe's single currency. Prime Minister Silvio Berlusconi is counting on Draghi to restore the reputation of the 123-year-old central bank after Fazio came under investigation in Rome and Milan for his oversight of a takeover fight. As a result of the the probes, a law was passed last week ending the governor's lifetime term. In addition, the government has been granted the authority to remove the central bank head.The arrival of Draghi and new limits on the Bank of Italy's ability to block takeovers may also spur mergers in the banking industry, investors said. Fazio opposed foreign purchases of local lenders, while Draghi comes to the post with a record of defending and promoting competition and corporate takeovers.
The new Bank of Italy governor will also replace Fazio as a member of the European Central Bank's governing council and have a say in setting interest rate policy in the 12 euro nations. Fazio was considered a hawk on rates, willing to quickly raise lending costs to fight inflation, said Lorenzo Codogno, co-head of European economics at Bank of America in London.
Draghi was named to a six-year term renewable one time. Berlusconi's cabinet approved Draghi unanimously, Finance Minister Giulio Tremonti said after a cabinet meeting in Rome today.
