Business Notes BANKING

A lending scheme that apparently took place on a branch manager's home computer in Georgia has grown into Italy's biggest banking scandal in years. Last week the disgrace claimed the two top officers of Italy's largest bank, the state-owned Banca Nazionale del Lavoro. Chairman Nerio Nesi, 64, and Director General Giacomo Pedde, 62, resigned after the bank's board heard the results of an initial probe into a scam in which the bank's Atlanta branch gave $2.6 billion worth of unauthorized export credits to Iraq to buy machinery and agricultural goods.

The branch manager, Christopher Drogoul, apparently issued the credits and kept the records at home. Drogoul, whose possible motives are still being investigated, has been dismissed. The Italian bank contends that it will suffer no losses from the scheme because the credits were guaranteed by U.S. and Iraqi agencies, but banking experts believe debt-laden Iraq may be hard pressed to make good if the deals go sour.