SIENA, Italy, Jan 29 (Reuters) - Monte dei Paschi's risk control unit and its internal audit committee had expressed serious misgivings about the bank's finance department, now at the centre of a scandal about shady structured finance trades, as far back as November 2009, according to internal documents.
Monte dei Paschi has been under fire over three loss-making derivatives deals that its new management say only recently came to light. The deals forced it to request extra state aid last November.
While the documents obtained by Reuters do not refer specifically to the three deals under scrutiny, they say that in late 2009-early 2010 the bank's then-executives faced tough questions from internal auditors and risk inspectors about how its financial portfolio was managed.
The documents quote a report from the risk control unit after an Aug. 5-Sept. 30, 2009 audit of the finance department, headed at the time by Gian Luca Baldassarri, who was forced to quit shortly after the arrival of new management last year.
Baldassarri could not be reached for comment.
The documents say the audit had uncovered a "systematic overshooting of risk limits" in the management of the group's 24-billion euro proprietary portfolio.
The inspectors also singled out "deficiencies in controlling the compliance of contract documents related to structured operations and/or derivatives positions," without detailing these contracts.
Some operations were carried out outside the company's check-and-balance systems. Some contracts were "not always in line with the best market valuations", and the indicated value of some positions did not reflect their mark-to-market value.
Reporting By Stefano Bernabei and Silvia Aloisi; writing by Silvia Aloisi; editing by Philippa Fletcher