The European Central Bank's (ECB) concern about the controversy surrounding Antonio Fazio, the embattled Bank of Italy governor, was highlighted yesterday in remarks by Lucas Papademos, ECB vice-president, on the importance of fair play in Europe's financial markets.

The ECB has so far avoided passing judgment on Mr Fazio, who has resisted calls for his resignation following revelations in July that he and his wife were taped by investigative magistrates in compromising conversations with an Italian banker conducting a takeover battle.

Critics say Mr Fazio, who oversees Italian banking regulation, demonstrated clear bias against ABN Amro, the Dutch bank that was also in the takeover battle for an Italian bank.

Recently in an interview with The Irish Times, president Jean Claude Trichet denied the ECB's code of conduct implied a responsibility on the part of the ECB to remove Mr Fazio from his position - which entitles him to sit on the ECB's governing council.

However Mr Trichet did say that the ECB was monitoring the situation in co-operation with the Bank of Italy.

The latest intervention from ECB vice president Lucas Papademous - may reflect a concern that the allegations against Mr Fazio could tarnish the ECB's own reputation.

Asked about Mr Fazio during the presentation of an ECB study, Mr Papademos said: "We have emphasised the great importance that the ECB attaches to financial integration and to the principle of equal access and equal treatment."- (Financial Times Service)