World's oldest bank caught up in trading scandal
Saturday 26 January 2013
We've already had "Bunga Bunga" parties and football-match fixing. Now Italy's latest controversy finds the world's oldest bank at the centre of a near-€1bn (£852m) trading scandal.
Banca Monte dei Paschi di Siena, which was founded in 1472, was the subject of intense scrutiny yesterday after complex derivatives losses were uncovered at the lender.
It already needs €3.9bn in government aid to meet European banking rules and is facing up to €720m on losses linked to the risky trades.
According to reports, the trades were made between 2006-2009 and are understood to involve hedges against the risks of buying Italian government bonds.
Italy's Prime Minister, Mario Monti, said the government would insist on "maximum clarity and transparency" while the details were unwound but denied that his administration shared any responsibility for the crisis.
He claimed that the problems were confined to Monte Paschi and gave his backing to the Bank of Italy, which was headed by European Central Bank President Mario Draghi when the trades were made.
"Italian savers should know, and I think they know, that Italian banks have been among the most solid during the crisis," he added.
The bank's shareholders met yesterday in the Tuscan town of Siena to discuss the €3.9bn bailout.
However, it was inevitably the trading scandal which attracted most attention.
"It's as if they were playing poker at the casino, and the more money they were losing, the more they kept gambling," Pietro Rizzo, a pensioner and former employee of the bank, who was awarded shares as part of his severance payment, told Reuters.
He added: "They were sinking and kept trying to find a way to stay afloat to hide the losses. They should have told the truth."
In response, the bank said that the trades would be investigated fully to "precisely assess the impact of the transactions and consequently adopt any measures needed, including a retrospective restatement of their accounting representation."
Banca Monte is due to report further details about the controversial trades in mid-February.
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 Christians: The world's most persecuted people
- 3 The secret report that helps Israelis to hide facts
- 4 Danish TV reporter is all business up top, all party down below
- 5 Denmark bans kosher and halal slaughter as minister says ‘animal rights come before religion’
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Israel-Gaza conflict: The children were playing in the street with toy guns. The air strikes were tragically real
Danish TV reporter is all business up top, all party down below
Syria conflict: Syrian and Turkish Kurds unite to battle Isis threat - ‘We shoot them like sheep, but next day double the number return’
Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...
£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...