Only a month ago, the European Union gave the Bank of Italy a telling off, saying that the Italian banking market was "too closed" to foreigners. It suggested that the Bank of Italy was not encouraging foreign participation in the Italian banking sector, in fact quite the opposite.

Two foreign takeover bids just launched will therefore be watched with great interest. The Spanish banking group Banco Bilbao Vizcaya Argentaria (BBVA) has notified the Bank of Italy that it intends to make a bid for Banca Nazionale di Lavoro (BNL), Italy's sixth-largest financial group, valued at 7.3bn. If the Bank of Italy gives its approval this would be the first foreign takeover of an Italian bank. Almost simultaneously the Dutch group ABN Amro notified the Bank of Italy of its potential bid for Banca Antonveneta.

These two potential takeovers are seen as test cases to demonstrate if the Bank of Italy is genuinely prepared to open up the countrys banking sector to foreigners, as it claims it is. Many, Italians included, consider reform of the the country's banking is long overdue.