Domenica, 21 Ottobre 2018

MPS derivatives scandal ignites political furor in Italy


Milan, January 23 - In the wake of a derivatives
scandal, Italy's third-largest lender Banca Monte dei Paschi di
Siena (MPS) saw its stock to plunge 7.3% on Wednesday and
sparked a political furor over its request for 3.9 billion euros
in State aid to cover its capital needs.
Controversy exploded over the government's choice to
bailout the bank, which is suffering deep losses stemming from a
soured government-bond portfolio and investment hedging gone
Politicians in rival camps criticized caretaker Premier
Mario Monti, who had a role in the MPS bailout and spearheaded
passage of recessionary austerity measures to tackle Italy's
sovereign-debt crisis last year.
Leader of the law-and-order party Italy of Values (IdV),
Antonio Di Pietro, called the bailout "grievous", and said it
was roughly the size of a new, unpopular property tax passed by
Monti's technical government.
"Monti should return the 4 billion euros he gave to Mr.
Mussari," wrote Massimo Bitonci, who is running in Veneto for a
post in the Senate on the populist Northern League party ticket.
Bitonci cited what the bailout could provide in terms of
groceries for two million poor families, people excluded from
pension benefits by reforms, and 1.2 million pensioners who live
on less than 500 euros a month.
Ex-economy minister Giulio Tremonti, who served under
ex-premier Silvio Berlusconi and is also running in the upcoming
State elections, chastised European Central Bank president Mario
Draghi on the social network Twitter for not sending a
"vigilance letter" to MPS.
Heavyweight leader of CGIL union Susanna Camusso fired at
Tremonti and the ex-Berlusconi government for feigning the
health of Italian banks under their watch.
On Tuesday, news broke that a three-year-old derivative
deal with Japanese bank Nomura means MPS will book an additional
loss of at least 220 million euros for 2012.
The news led to the resignation of MPS ex-chairman Giuseppe
Mussari from his post as chairman of the Italian banking
association ABI the same day.
Italian newspaper Il Fatto Quotidiano reported that MPS
managers became aware of the three-year-old derivative trade,
named "Alexandria", just last October.
The derivatives losses were revealed during an accounting
overhaul launched by a new management team, reported the
Financial Times.
MPS Chairman Alessandro Profumo and CEO Fabrizio Viola were
brought in last year after the bank failed to meet European
capital requirements.
Mussari resigned from his ABI post on Tuesday after Nomura
said he had personally approved the derivative trade during his
tenure as MPS chairman.
Mussari firmly denies any wrongdoing.
MPS issued a statement saying the Nomura derivative deal
was one of several structured transactions it was reviewing.
MPS is also examining a separate contract structured by
Deutsche Bank, according to the Financial Times.
In November, MPS asked to increase state aid by 500 million
euros to 3.9 billion euros, due to possible losses from past
transactions related to its exposure to Italian State debt.
MPS stated that a review of those deals will be submitted
to the MPS board in February, and that the bank would report in
a timely way any impact on its accounts.
Press reports say the 2009 Nomura deal was made to reduce
risk exposure by swapping troubled assets for investment-grade
Treasury bonds.
MPS has suffered heavy losses on its 24-billion-euro
portfolio of Italian bonds.
The Nomura derivatives deal is the latest in a series of
setbacks for the 540-year-old Tuscan lender, which already
reported a 1.66-billion-euro loss in the first nine months of

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