Another step forward for Italy

22 February 2006 By Chris Hughes

The chairman of Capitalia has been suspended amid investigations relating to the collapse of Parmalat. Given Capitalia s exposure to recent financial scandals, the move signals Italy s seriousness about restoring faith in its financial system.

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Cesare Geronzi, chairman of Capitalia, was on Tuesday suspended from all company posts by a Parma court, the Italian lender said.

The move related to judicial investigations into Geronzi's possible involvement in Parmatour and Ciappazzi, companies linked to Parmalat, the Italian dairy group that collapsed in 2003 owing E14bn.

Parmatour, a tour operator, was owned by Francesca Tanzi, daughter of Calisto Tanzi, Parmalat's founder. Ciappazzi, a mineral water company, was acquired by Parmalat in 2002 for a price well above market value.

Geronzi is to appeal the court's decision to bar him. His lawyer reportedly said it would not be hard to prove that the investigation was groundless.

Capitalia was among Parmalat's main lenders. It has repeatedly denied any wrongdoing in connection with the collapse of the company.

Shares in Capitalia, Italy's fourthlargest bank, fell as much as 2% on Wednesday morning but later recovered. Takeover speculation has sent the stock up by over 50% over the last year.

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