Italian financial police have carried out seizures of a total of about €40 million, equivalent to $54 million as part of probe set to shed light on the Monte dei Paschi di Siena Bank dealings.
As promised, the bank is dealing with customers concerns over losses linked to derivative trades and is completing a review of those deals. Thus far, after registering an equivalent of $972 million in losses, the bank needed a government bailout. Prosecutors in Siena have questioned former managers in recent days, claiming the bank overpaid for Antonveneta, another Italian bank, which it purchased for 9.3 billion Euro. Established in 1472, the bank is the world's oldest running financial institution.
"The true nature of some of the transactions involving Monte dei Paschi di Siena emerged only recently , following the discovery of documents kept hidden from the supervisory authority and brought to light by the new management of MPS," Italy's Central Bank Governor Ignazio said.
The Wall Street Journal reports that the "541-year-old bank was so strapped for cash in late 2011 that it negotiated for a covert loan of nearly €2 billion ($2.7 billion) from the Bank of Italy even as executives were publicly describing the lender's funding position as comfortable, according to the Bank of Italy and people familiar with the deal."
The 2011 loan is the latest example of hidden financial dealings that are now coming back to haunt bank. Monte dei Paschi di Siena Bank said on Wednesday that its losses totaled €730 million on various structured finance deals that it got itself into years ago with foreign investment banks. Those deals are now at the center of a criminal probe into possible market-rules violations by the bank.
