Italy’s Monte dei Paschi sues Deutsche Bank, Nomura over losses

Monte_dei_Paschi_di_Siena.svgLast week, Italian lender Monte dei Paschi di Siena filed suit against Deutsche Bank and Nomura as part of an effort to recoup some of its losses incurred as a result of financial transactions that went bad.

Monte dei Paschi filed two separate suits one day after taking a $5.3 billion government bailout and said it plans to sue Antonio Vigni, its former CEO, and Giuseppe Mussari, its former chairman, over their involvement in the transactions. Last month, the bank said that it had lost $949 million on three transactions used to hide the extent of the bank’s financial problems, according to The New York Times.

One of the lawsuits is related to Mussari, Nomura and a deal made in 2009 called Alexandria, while the other lawsuit pertains to Vigni, Deutsche Bank and a 2008 trade called Santorini. The two deals have been under public scrutiny since the bank announced the losses last month and Fabrizio Viola, Monte dei Paschi’s new CEO, discovered correspondence between the bank and Nomura hidden in a safe.

The Alexandria transaction led to $355 million in losses, Santorini resulted in a $397 million loss and Nota Italia, a third transaction that is not named as the primary focus of the suit, caused the bank to incur $197 million in losses, The New York Times reports.

The Bank of Italy, the nation’s central bank, said that after Monte dei Paschi acquired Antonveneta in 2008 for $11.7 billion, a sum regarded by industry experts as far too large, the bank ran into cash problems, leading it to conceal certain parts of the transaction. Italian prosecutors have called for the bank to be held accountable and are investigating the bank’s failure.

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