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Draghi Says Renzi Can’t Limit Bank of Italy Officials’ Salaries

Bank of Italy Governor Ignazio Visco. Photographer: Alessia Pierdomenico/Bloomberg
Bank of Italy Governor Ignazio Visco. Photographer: Alessia Pierdomenico/Bloomberg

June 10 (Bloomberg) -- Prime Minister Matteo Renzi’s government can’t impose a cap aimed at reining in state salaries on Bank of Italy officials’ pay as that would compromise the independence of the institution, European Central Bank President Mario Draghi said.

“Member states may not seek to influence the members of the national central banks’ decision-making bodies by amending national legislation affecting their remuneration,” said a May 26 opinion of the ECB Governing Council signed by Draghi, a fomer Bank of Italy governor. The opinion was requested earlier last month by Italy’s Finance Ministry, the ECB said in the document posted on its website.

The council’s opinion may put the ECB at odds with Renzi. The government cabinet passed a decree on April 24 capping annual pay of Italy’s top civil servants at no more than 240,000 euros. That’s less than half of Bank of Italy Governor Ignazio Visco’s nominal salary of 550,000 euros ($745,000) detailed in the bank’s yearly report published last month.

While the Bank of Italy and its staff are not paid by the Italian state, the government specifically asked the ECB for an opinion on whether the salary cap can be applied to them.

Financial Independence

The cap included in the decree “is expressly described as a principle or a guideline, rather than a rule requiring strict compliance,” the ECB said in its five-page opinion posted on the website on June 3. It added that the Bank of Italy “can independently use its financial resources as it sees fit to fulfil its mandate.”

While the Bank of Italy spontaneously cut its top managers’ salaries by 10 percent in 2012 and 2013 in line with previous governments’ initiatives to reduce civil servants’ pay, salaries remain above counterparts’ in other countries. The central bank’s nominal salaries refer to the authorized gross pay before the 10 percent reduction.

Visco’s 2013 nominal salary is 46 percent higher than Draghi’s, and more than three times what Federal Reserve Chair Janet Yellen is set to receive in 2014. Other managers at the Bank of Italy also have compensation above the cap passed by Renzi’s cabinet, with Director General Salvatore Rossi earning 500,000 euros last year and his three deputies each getting 350,000 euros, according to the nominal salary figures in the Bank of Italy report.

A spokesman for Visco, contacted today by Bloomberg News, declined to comment on the ECB opinion. A spokesman for Italian Finance Minister Pier Carlo Padoan, had no comment on the document. Both requested not to be identified in line with internal policy.

Draghi, who led the Bank of Italy until the end of 2011, was paid 378,240 euros last year, according to the annual accounts for 2013 that the Frankfurt-based ECB posted in February. Vice President Vitor Constancio made 324,216 euros.

Federal Reserve Chair Janet Yellen is set to receive an annual salary of $201,700 (148,900 euros) this year, according to the Fed’s website.

To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net Alessandra Migliaccio, Kevin Costelloe

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