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Top Fiat Managers Expected to Resign

The top two executives at Italy's crisis-riddled Fiat are widely expected to resign and could hand in their notice as early as a board meeting today, a source familiar with the situation said.

The top two executives at Italy's crisis-riddled Fiat are widely expected to resign and could hand in their notice as early as a board meeting today, a source familiar with the situation said.

Media reported the next chief executive could be Enrico Bondi, a manager close to bank Mediobanca which grabbed a stake in Fiat's Ferrari group earlier this year, snatching IPO rights for the sportscar maker from Fiat's key creditor banks.

In a statement, Fiat said the resignations of Chairman Paolo Fresco and CEO Gabriele Galateri were not on the official agenda of today's board meeting, but the source said that discussions need not stick to the published list of business.

"The fact it isn't on the agenda doesn't mean that they won't present their resignations tomorrow," said the source.

Fiat managers have come under intense pressure as the once-great automaker struggles to pull out of deep losses, laying off thousands of workers to help offset a slump in car sales and facing a series of strikes.

Last week billionaire businessman and Prime Minister Silvio Berlusconi added his voice to the chorus saying: "If Fiat had the right management it would be able to pull out of the crisis."

Speculation Fresco will step down from Fiat regularly runs through the market, which blames him for loading the energy-to-insurance group with huge debts to fund its diversification out of the car business.

Galateri, on the other hand, is seen as a trusted counterpart for a posse of banks that have put Fiat on a strict debt-cutting diet in return for a huge loan. The 55-year-old reluctantly moved to Fiat in June after years of working closely with Fiat's controlling Agnelli family.

"There is apparently pressure from the banks for Galateri not to resign," the source said.

Leading newspaper La Repubblica said in its online version that the two managers might resign at another board meeting on Wednesday. A Fiat spokesman declined to comment "on reports about an extraordinary meeting on Wednesday."

On Monday, Fiat's shares closed down 0.7 percent at 9.05 euros, outperforming a three percent drop in European auto stocks.

Mediobanca Move?

Italian media said Gianluigi Gabetti, an experienced manager close to the Agnellis, would replace Fresco while Bondi, CEO of insurer SAI, would take over as Fiat's third chief executive in six months.

Bondi is close to investment bank Mediobanca, which stole a march on Ferrari after Italy's other major banks signed a three billion-euro loan with Fiat and set out a restructuring plan aimed at returning Fiat Auto to profit in 2004.

Mediobanca CEO Vincenzo Maranghi is said to like the idea of splitting the prestigious Alfa Romeo marque out of Fiat Auto and merging it into the Ferrari-Maserati group.

Any such move might scupper a deal between Fiat and General Motors Corp. which gives the Italian group the option to sell its 80 percent stake in Fiat Auto to the world's largest carmaker from 2004.

GM bought 20 percent of Fiat Auto for $2.4 billion in 2000. But in October the U.S. giant, struggling to make other acquisitions and its pension plan bear fruit, wrote down most of that value and analysts say the group would be glad to get out of the Fiat deal.

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