January 22, 2013 11:08 pm

Italian banking head quits over MPS scandal

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Giuseppe Mussari, one of Italy’s top bankers, has resigned as head of the Italian banking association amid a growing scandal surrounding the approval of a series of derivative contracts at Monte dei Paschi di Siena while he was chairman of the Tuscan bank.

Mr Mussari, who left Monte dei Paschi last year after the bank stoked up losses related to its exposure to €24bn of Italian sovereign debt and a costly acquisition of a local lender, said he had done nothing wrong but did not want to drag the banking association into a public debate while he set about clearing his name.

The resignation of the banker comes as Monte dei Paschi’s new management on Tuesday said they were examining a series of derivatives transactions undertaken by the bank during the tenure of Mr Mussari.

The bank, which is due to agree plans this week for a capital increase to underpin a request for €3.9bn in state bail out bonds, made the discovery as part of a clean-up instigated by a new management team lead by Alessandro Profumo, chairman, and Fabrizio Viola, chief executive.

Monte dei Paschi said on Tuesday that one of the deals structured by Nomura appeared not to have been approved by the board raising questions about Mr Mussari’s knowledge of the transaction.

The bank, Italy’s third-largest bank by assets, will book a loss of at least €220m in its full-year results dating from that 2009 derivative deal structured by Nomura, according to people familiar with the matter.

The bank is also investigating a deal structured by Deutsche Bank.

Monte dei Paschi shares fell by more than 5 per cent on Tuesday to a near record low, giving it a market capitalisation of €3.2bn. The shares have lost more than 90 per cent of their value in the past five years.

Mr Mussari was the key figure at Monte dei Paschi for more than a decade both as the bank’s chairman and previously as the head of its largest shareholder, the local banking foundation.

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