ITALY'S Finance Minister Domenico Siniscalco sensationally resigned yesterday after he failed to persuade Bank of Italy Governor Antonio Fazio to quit.

Parmalat Finanziaria SpA Chairman Enrico Bondi has proposed honouring 1% of the €1.8bn in debt claims from the Italian food company’s US lenders, including Citigroup Inc and Bank of America Corp.

PARMALAT Finanziaria’s former chief financial officers Fausto Tonna and Luciano Del Soldato are among six executives arrested by the Italian police today as part of a probe into the collapse of Italy’s largest food company, sources familiar with the investigation said.

ITALY’S biggest food company, Parmalat Finanziaria, may seek bankruptcy protection from creditors this week after the disclosure that a $4.9 billion bank account didn’t exist.