Monte dei Paschi seeks to close scandal

©Bloomberg

The new management of Monte dei Paschi di Siena, the Tuscan bank at the centre of a widening derivatives scandal, has sought to draw a line under the episode despite finding evidence of “clear errors” in the accounting of those transactions.

Fabrizio Viola, chief executive, said three lossmaking deals at the centre of the revelations were the only ones the bank had discovered that were unaccounted for and he confirmed losses related to the trades would come in at €730m. Shares in the bank rose more than 6 per cent.

The move by the bank, which has requested its second state bailout in four years, came amid escalating judicial action against its former management and further questions about regulatory supervision that have caused a political outcry in the run-up to national elections on February 25.

In Frankfurt, Mario Draghi, president of the European Central Bank, was forced to give a robust defence of the supervision of MPS during the period when the structured finance deals took place and he was head of the Bank of Italy.

Mr Draghi said the BoI had “done everything it should, appropriately and in time”.

“I don’t want to take sides in Italian elections but you should certainly discount much of what you hear and read in blogs and stuff. It’s part of the regular noise that elections produce,” he added.

However, questions remain about the extent to which parliament was kept informed about the problems at the bank ahead of its request for a bailout, after Mario Monti, Italy’s prime minister, revealed he did not know about judicial investigations into MPS when approving the rescue loan.

Parliament approved €3.9bn in state loans to MPS, Italy’s third-largest lender, in December 2012. Since then it has emerged that the bank’s former management was under investigation for suspected fraud involving lossmaking derivatives transactions with foreign banks and other financial crimes.

Asked by the Financial Times if he had been aware of the judicial inquiry, Mr Monti, who was holding a campaign rally in Padua ahead of elections later this month, replied: “No”.

Italy’s finance police have seized €40m of shares and assets related to an investigation into possible market abuse by the bank’s former management.

Giuseppe Mussari, MPS’s former chairman, last month resigned from his role as head of the Italian banking association when news of the derivatives losses first broke. He has said he did nothing wrong.

Reporting by Rachel Sanderson, Guy Dinmore, Giulia Segreti and Ferdinando Giugliano