By Francesca Piscioneri
ROME (Reuters) - Italian Prime Minister Paolo Gentiloni has proposed that Bank of Italy Governor Ignazio Visco be re-appointed for a second six-year term, despite widespread criticism of the central banker by political parties, sources said on Thursday.
Visco, whose mandate expires at the end of this month, is a board member of the European Central Bank and is considered a close ally of ECB President Mario Draghi, who was his predecessor at the Bank of Italy.
He has been attacked by parties of all political stripes following the collapse of 10 Italian banks over the past two years, with the most recent broadsides coming from Gentiloni's main backer, former Prime Minister Matteo Renzi, who leads the ruling Democratic Party (PD).
However, Visco, who has blamed a prolonged economic turndown for the banking crisis, maintained the crucial backing of Gentiloni and President Sergio Mattarella, political sources told Reuters.
Renzi said earlier on Thursday that the Bank of Italy had done a poor job of banking oversight under Visco and he would prefer to see him replaced, flanking the anti-establishment 5-Star Movement which has campaigned actively for Visco to go.
"The Bank of Italy has been a weak point in the system," Renzi said in a radio interview. "If they consider it is worth the effort to reconfirm Ignazio Visco, I hope the next six years will be better. I can't see how they could be worse."
Gentiloni made his recommendation in a letter sent to the Bank of Italy's ruling body, its Superior Council, three political sources told Reuters.
The proposal must now be approved by the council, which will meet on Friday, and then signed off on by Mattarella. Both are expected to give their green light.
With a national election due by May next year, the problems at Italian banks have become a focal point of the political battle.
In a surprise move that sparked an institutional tug of war with Mattarella, Renzi's PD tabled a motion in parliament this month criticizing Visco, whose re-appointment had previously been considered almost a formality.
Renzi has since continued to criticise Visco, saying the party did not support him, while adding that Gentiloni was free to propose whom he wanted for the job.
The PD, as the ruling party, had itself been targeted by the opposition after the bank collapses wiped out the savings of thousands of people who held shares and bonds in the lenders.
(Story refiles to cut extraneous 's' off word 'says' in headline.)