Monte Paschi probe to widen as Italian election nears

Sat Feb 2, 2013 11:23am EST
 
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By Philip Pullella

ROME (Reuters) - A plan by Italy's central bank to use bonds to bail out the troubled Monte Paschi bank can go ahead, a court ruled on Saturday, as a scandal surrounding the world's oldest lender looked likely to widen three weeks before a national election.

Magistrates in three cities investigating the Tuscan bank were poised to issue new summonses for more witnesses to give information next week following testimony by a raft of bankers in the past few days, leading newspapers said.

The bank is under investigation over an opaque series of derivatives and structured finance contracts between 2007 and 2009 that have left it facing losses of 720 million euros and dependant on the state lifeline.

Former prime minister Silvio Berlusconi, leading the centre-right's election charge, has tried to cash in on the bank's woes to attack both his centre-left rivals and outgoing prime minister Mario Monti, whose Treasury approved the Monte Paschi bailout.

A Rome administrative tribunal turned down a request by Italy's leading consumer group, Codacons, for the immediate suspension of the plan by the Bank of Italy to use 3.9 billion euros ($5.34 billion) in bonds to shore up the bank.

The court set a new hearing for February 20.

Tuscany is a traditionally leftist area and Monte Paschi has for decades had close ties to leftist parties such as the Democratic Party, the largest in the center-left opposition coalition.

"We are convinced that the Italian left has much to say about (Monte Paschi) and instead is not saying anything," Angelino Alfano, the center-right's candidate for prime minister, said on Saturday.   Continued...

 
Monte Dei Paschi bank headquarters is pictured in Siena January 25, 2013. REUTERS/Stefano Rellandini