Italy's centre-right government will hear a report next Wednesday from Domenico Siniscalco, finance minister, about the behaviour of Antonio Fazio, the Bank of Italy governor, in a murky banking takeover battle.

Silvio Berlusconi, Italy's prime minister, announced the decision after a cabinet meeting that followed a long discussion of Mr Fazio's actions among party leaders of the ruling coalition on Thursday evening.

Some opposition leaders are demanding Mr Fazio's resignation after court documents leaked to the media this week showed that he had given advance notice to Gianpiero Fiorani, chief executive of Banca Popolare Italiana, of his decision to approve BPI's bid for Banca Antonveneta, another Italian bank.

Antonveneta was also the subject of a bid from ABN Amro of the Netherlands. In the view of Mr Fazio's critics, his position as central bank governor is untenable because he has been exposed as failing to act as an impartial regulator in the takeover battle. However, the Bank of Italy stoutly maintains that it has acted correctly throughout the affair, and Mr Fazio has given no indication that he is considering resignation.

Within the government, there are differences of opinion about Mr Fazio. Mr Siniscalco and Giulio Tremonti, a deputy prime minister and former finance minister, have emerged as Mr Fazio's strongest critics, arguing that the affair has damaged the reputation of the central bank.

More cautious criticism has come from Marco Follini, leader of the Union of Christian Democrats, the government's third largest party. However, the Northern League, the government's fourth biggest party, has sprung to Mr Fazio's defence.

Mr Fazio, who has run the Bank of Italy since 1993 and serves an indefinite term of office, can also count on the support of several influential legislators in Forza Italia, Mr Berlusconi's party, in the rightwing National Alliance and in the UDC. - (Financial Times Service)