Given that Italy's fifth largest bank, the lyrically named Monte dei Paschi di Siena, first known as the Monte di Pietà, has been around since 1472, one can credibly argue that Italians invented banks.

Which leaves us with a question: how come the inventors are currently served by one of the most costly and least consumer friendly banking systems in the industrialised world?

According to the World Retail Banking Report issued last week, Italian banks are the most expensive in Europe, at least from the consumer viewpoint.

An analysis of 130 banks in 19 countries claimed that the annual cost of a basic current account in Italy is €113 euro as compared with €89 in France, €81 in Spain, €69 in Portugal, €65 in Britain, €58 in Belgium and only €25 in The Netherlands.

Irish banks, long criticised for their lack of competitiveness, were not surveyed.

The World Retail Banking Report is all the more topical given that the governor of the Banca D'Italia, Antonio Fazio, is currently fighting a rearguard action to thwart controversial takeover bids by a Spanish and a Dutch bank for two Italian banks. At stake may be more than the immediate future control of the two Italian banks.

Has the time come to bravely face up to the cold winds of single market European competition and finally say goodbye to a cosy, clientelist banking system which permeates a national economy in which concepts like market forces, transparency and meritocracy barely figure?

The current fuss has been prompted by Spain's Banco Bilbao Vizcaya Argentaria and by Dutch bank ABN Amro Holding NV.

Banco Bilbao, already a 14.7 per cent shareholder in the Banca Nazionale del Lavoro Spa (BNL), has made a €6.5 million, all-share bid for the BNL whilst ABN Amro, already a 13 per cent shareholder in the Banca Antoniana Popolare Veneta Spa (Antonveneta), is also considering a takeover bid.

These moves by Banco Bilbao and ABN Amro are not new. They were partly responsible for prompting EU Internal Markets Commissioner Charlie McCreevy to ask Mr Fazio last month for explanations as to why the Italian central bank was blocking foreign takeovers of Italy's banks.

Earlier this week, European Commission officials warned Mr Fazio that Brussels and not Rome would have the final say on the anti-trust implications of any takeover deal.

Furthermore, on Thursday Mr McCreevy said: "Some authorities still favour 'national champions' against foreign takeovers. Most national authorities remain domestically-minded."

That remark may have been prompted by reports that Mr Fazio was busy organising different consortiums of Italian banking interests to step in and make rival bids for both the Banca Antonveneta and the BNL.

Nor are such moves without support in Italy.

Commenting on the possible foreign takeovers last weekend, Labour Minister Roberto Maroni spoke of an "aggression" against the Italian financial system whilst parliamentary affairs minister, Carlo Giovanardi, last month argued that Italy should not allow its banks to be "colonised" or "conquered".

However, Prime Minister Silvio Berlusconi sounded a different note last week, telling reporters in Brussels that the "Italianness" of Italy's banking system was not at risk.

Finance Minister Domenico Siniscalco was even more outspoken.

On the TV chat programme Porta a Porta, he said: "There is no way at European Union level that you can defend the 'Italianness' of Italian banks... A bank's nationality is not a market category, there's only one English bank in London and that doesn't seem to be a problem for the City."

Given the current sluggish nature of the Italian economy - it grew by 1.1 per cent last year and a 1.5 per cent growth is Mr Siniscalco's forecast for this year - one might have imagined that Italy would welcome foreign investment in its banks.

Yet, there are those such asMR Giovanardi who argue that foreign banks "would care less about the state of the nation's firms" than Italian banks.

Is it not true, though, that the business of banks is lending money? Is it really true to suggest that foreign-controlled banks in Italy would not lend to Italian companies with a sound business plan, solid assets and a good track record?

Or is not true that sound business and banking principles would argue against lending money at highly favourable rates to failing companies that just happen to be part of the "club", the Italian business elite?

Is it possible that Mr Fazio's staunch resistance of the foreign hordes is based on the fear that his cosy, clientelist control of the Italian banking cartel might lose out to the icy winds of market forces?

The experience of the Parmalat collapse in December 2003 (even if that also involved a number of non-Italian banks) and the collapse of food products giant, Cirio, a year earlier would suggest that Europe's fourth largest economy could do with less of the old boys' club and more of market forces.

For the time being, the Italian government, headed by a media tycoon who has always fervently espoused the notion of a market-driven economy, would certainly seem to think so.

Mr McCreevy continues to call for cross-border activity within the overall context of the consolidation of the European banking industry.

Furthermore, Spanish Prime Minister José Zapatero this week added his support for the Banco Bilbao's bid when saying that "we should respect the workings of the market".

Without Italian government support and with both the Spanish and the EU on his case, could it be that Mr Fazio may soon be caught between a rock and hard place?