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An Italian court has reversed convictions for market manipulation and false accounting against Monte dei Paschi di Siena’s former top management, dealing a blow to the prosecution of one of the most high profile financial crime cases.
On Monday the Milanese appeals court ruled that no crime was committed, overturning a 2020 ruling. Shares rose as much as 4 per cent in Milan after the ruling.
Three years ago Alessandro Profumo, the bank’s chair between 2012 and 2015, and its former chief executive Fabrizio Viola, were found guilty of booking derivatives transactions structured by their predecessors as “repurchase agreements.”
Monday’s ruling brings relief to the state-owned bank, which set aside billions for potential damage claims in connection to this case and another one involving the institutions and executives that initially structured the transactions. It also paves the way for a more lucrative privatisation than anticipated.
The Italian government bailed MPS out in 2017 after the bank failed to raise capital as losses on the derivatives deals piled up due to the country’s sovereign debt crisis. The lender is due to be privatised by the end of next year as part of an agreement with the European Commission for approving the state-led rescue.
Last month Rome sold a 25 per cent stake in the lender, after a turnaround plan led by chief executive Luigi Lovaglio resulted in an upgrade of its credit ratings.
In 2013 MPS restated its accounts after it emerged that the transactions — known as Alexandria and Santorini — were used by Profumo and Viola’s predecessors to mask losses linked to its exposure to the country’s government bonds at the height of sovereign debt crisis.
Two years later, Consob, the national financial regulator, requested that the lender amend how it had booked the transactions on its balance sheet to reflect that they were derivatives.
But in October Italy’s supreme court upheld a ruling acquitting Viola’s and Profumo’s predecessors as well as other former executives at Deutsche Bank and Nomura, who had first structured the transactions between 2008 and 2012.
The bank subsequently reduced its estimates for legal claims and said the risk linked to some of those claims, previously considered “possible”, had become “remote”.
