Try the new FT.com

December 27, 2005 6:02 pm

Deutsche hit by Consob charge over Unipol deal

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

Italy’s market regulator dealt a blow to Deutsche Bank last week, adding to a series of controversies for the German group in Italy this year.

Consob said a derivatives deal struck with a client trying to buy a bank constituted an undisclosed pact to work together on the acquisition.

The ruling represents the first formal reprimand for Deutsche in Italy this year after its involvement in banking scandals that have led to arrests of financiers and the resignation of Antonio Fazio, governor of the Bank of Italy.

Deals in which Deutsche participated continue to be investigated by prosecutors. The bank took part in a number of transactions with Banca Popolare Italiana, the group whose former chief executive is under arrest.

Deutsche also extended a €1bn ($1.2bn) line of credit to Stefano Ricucci, a property developer who is also under investigation for his part in BPI’s aborted takeover of Banca Antonveneta.

Deutsche ended its relationship with Mr Ricucci but only after it had allowed him to take an ill-fated run at RCS, the media group that owns newspaper Corriere della Sera.

Deutsche has said it stands by its work, and is continuing to work with regulators. It has not been accused of any criminal wrongdoing and there is little immediate effect of Consob’s ruling, which concerns the attempt by insurer Unipol to buy Banca Nazionale del Lavoro.

Nonetheless people close to the group say Deutsche has in recent months taken steps to stem damage to its reputation. It has examined some of its risk management and client selection processes to try to avoid a repeat of some of the entanglements.

Michael Cohrs, one of its most senior executives, went to Italy recently partly to meet senior business people and politicians.

Consob’s ruling highlights the conflicts of interest which can be inherent when a large financial group takes on multiple roles in the same transaction.

The regulator is even critical of the way in which Deutsche has tried to defend itself while being a financial adviser to Unipol in its effort to acquire BNL; one of the global co-ordinators of a large capital raising undertaken by Unipol to fund the acquisition; a partner in the derivatives transaction over BNL shares; and one of the banks that had made finance available to Unipol.

Deutsche, Consob says, argued that the derivatives deal was separate from its role as an adviser on the acquisition and part of its “normal banking business”. But Consob says they are linked.

Investment banks are paid fees partly in relation to the success of the deals they work on, Consob says. Deutsche’s advisory business was therefore being aided by a transaction that saw it sell shares in its client’s target to the client.

Unipol is still waiting for clearance from regulators to launch its offer and the Bank of Italy could wait for a new governor to arrive before ruling on the bid.

Meanwhile Giovanni Consorte, Unipol’s chairman, was yesterday being interrogated by prosecutors over the Antonveneta battle. People close to the BNL deal are thinking of how the transaction might be rescued if Mr Consorte resigns. He says he has done nothing wrong.

 

Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments
SHARE THIS QUOTE