Ex-Monte Paschi chiefs deny hiding Nomura derivatives trade

SIENA Thu Jan 30, 2014 12:50am IST

People are reflected in the window of a Monte Dei Paschi Di Siena bank in Rome January 29, 2013. . REUTERS/Max Rossi

People are reflected in the window of a Monte Dei Paschi Di Siena bank in Rome January 29, 2013. .

Credit: Reuters/Max Rossi

Stocks

   

SIENA (Reuters) - Former top managers at Banca Monte dei Paschi di Siena (BMPS.MI) denied on Wednesday that they hid the true nature of a 2009 derivatives trade with Nomura (8604.T) that prosecutors say was used to conceal losses at Italy's third-biggest bank.

The bank's former Chairman Giuseppe Mussari and former CEO Antonio Vigni are on trial in Siena charged with misleading regulators about the so-called Alexandria transaction with Japanese broker Nomura, one of a series of risky derivatives trades investigated by prosecutors.

Both are accused of hiding a key document known as a mandate agreement, which prosecutors and regulators say made clear that the trade was linked to the acquisition of 3 billion euros ($4.09 billion) of long-term Italian government bonds by Monte dei Paschi.

The link between the two trades meant they should have received different accounting treatment, which would have shown heavy losses. Alexandria and two other derivatives trades ultimately forced Monte Paschi to restate its accounts and book a loss of 730 million euros on its 2012 results.

The new management at the bank, which received a 4.1 billion euro state bailout last year after it was hit hard by the euro zone debt crisis, says it only discovered the existence of the mandate agreement when the document was found in a safe in Vigni's former office in October 2012, more than three years after it was signed.

However, Vigni told the court on Wednesday that "everybody at the bank knew" the Alexandria trade and the bond purchase were linked.

"The mandate agreement is a letter of intent that does not link anything ... One did not need to see the two contracts (to understand they were linked). Everybody knew about the link," Vigni said.

Mussari, also in court on Wednesday, said that he had never had an interest in hiding the document.

The bank is separately seeking 700 million euros in damages from Vigni, Mussari and Nomura over the trade. Nomura has denied any wrongdoing and has started its own legal action against Monte dei Paschi in London.

(Reporting by Silvia Ognibene; Writing by Silvia Aloisi; Editing by David Goodman)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

End of Planning Commission

REUTERS SHOWCASE

Climate Change

Climate Change

Climate change to cut South Asia's growth 9 percent by 2100 - ADB.  Full Article 

Ballmer Exits

Ballmer Exits

Ex-CEO Ballmer quits Microsoft board to focus on NBA's Clippers  Full Article 

Bribery Investigation

Bribery Investigation

Owed $6 billion, banks sharpen scrutiny of steelmaker Bhushan  Full Article 

Deal Talk

Deal Talk

JSW to buy Welspun Maxsteel for enterprise value of $165 million.  Full Article 

Needless Spending

Needless Spending

Exclusive - Icahn says Family Dollar wasting over $300 mln in breakup fees .  Full Article 

Luring Customers

Luring Customers

With cigars and crystal, Volvo makes eyes at Chinese rich.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage