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 Mario Balotelli: Staff at arson-hit Manchester Dogs' Home convinced Liverpool striker is behind five-figure donation
- 2 Friends 20th anniversary: Alison Jackson photographs reunited cast
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 4 The response to my Pizza Express review has been overwhelming, and taught me a lot about journalism
- 5 Free U2 album: How the most generous giveaway in music history turned into a PR disaster
Scottish independence: Despite defeat history may still point to Alex Salmond as the victor
Scottish independence referendum: Frankie Boyle reacts to nation's 'No' vote - 'To be fair, I've always hated Scotland'
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Scottish referendum: Police struggle to control Unionist rally in Glasgow's George Square
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...