Prosecutors have notified the embattled governor of the Bank of Italy that he is under investigation for his role in a takeover battle between two banks, and that they plan to question him, his lawyer said yesterday.

Italy is today said to be “paralysed” after the economy minister resigned amid a standoff with the Bank of Italy chief.

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