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Italy puts Libya bank under special administration

March 14, 2011

By Guy Dinmore in Rome, Published: March 14 2011

Italy has imposed controls on Libya’s Banca UBAE, but the Rome-based bank – which handles payments for Libya’s oil and gas exports – was told it would be allowed to continue “normal” operations.

The Bank of Italy said it had placed Banca UBAE under special temporary administration on Monday and appointed two commissioners to manage the bank in line with international measures following last week’s decision by the European Union to impose sanctions on five Libyan entities.

However, Banca UBAE would be allowed to continue “its normal activities”, the central bank said in a statement without further clarification. The Bank of Italy made no mention of freezing the Libyan bank’s assets. Banca UBAE handles payments for Libyan oil and gas and also manages several billion euros in deposits for Libyan government institutions. It released a statement saying it was continuing normal activities under the temporary management of the Bank of Italy.

“It has turned out better than we anticipated,” said a senior Banca UBAE official, who asked not to be named. Staff leaving the bank’s Rome headquarters declined to comment.

The EU last Friday ordered the freezing of assets of five Libyan entities, including its central bank and Libyan Foreign Bank.

Banca UBAE is 67.5 per cent owned by Libyan Foreign Bank, which is wholly owned by the central bank. Unicredit, Italy’s largest bank by assets, owns 10.8 per cent of UBAE. Eni, Italy’s state-controlled energy giant, owns 5.4 per cent.

The EU has not acted against Libya’s oil exports – a point noted by David Cameron, UK prime minister, at the EU summit last Friday.

“There is also consideration being given – because the point was made very powerfully by [EU foreign policy chief] Cathy Ashton – that this regime is still in receipt of a huge amount of money, including oil money, and so we do need to look at that whole question,” Mr Cameron said.

While some EU member states acted with a sense of urgency in freezing Libyan assets, diplomats said it was clear that Silvio Berlusconi’s centre-right government, which had close ties with Muammer Gaddafi, the Libyan leader, did not want to be seen to be taking the initiative.

Italy’s foreign ministry said last week that Italy – Libya’s former colonial power – had frozen bank accounts of individuals on the UN and EU blacklist, but it has not disclosed names or amounts.

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