Monte Paschi puts derivatives loss at 730 million euros

Wed Feb 6, 2013 6:21pm EST
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By Silvia Aloisi and Stefano Bernabei

SIENA, Italy (Reuters) - Monte dei Paschi di Siena (BMPS.MI: Quote), Italy's third biggest lender, said on Wednesday losses linked to three problematic derivative trades totaled 730 million euros ($988.3 million) as it sought to draw a line under a scandal over risky financial transactions.

After a six-hour board meeting, the bank said in a statement that the losses, stemming from trades made between 2006-09, would weigh on its net assets in 2012 and were calculated before any possible fiscal effect.

The impact on the 2012 results has not yet been determined and would depend on the accounting criteria used, including a possible restatement of previous financial results.

Monte dei Paschi, the world's oldest bank, has been at the centre of a financial and political storm since last month when it said it uncovered serious problems stemming from a series of complex derivatives and structured finance deals.

The bank's woes spiraled out of control in the wake of the 9-billion-euro acquisition of smaller rival Antonveneta in 2007, which left Monte Paschi badly weakened just as the global financial crisis erupted in 2008.

The derivative trades are at the heart of a fraud probe into former management of the bank which has deepened questions about the role of banking supervisors and the influence of local politicians ahead of Italy's parliamentary elections on February 24-25.

The findings of an internal review of the trades, which the bank's current management says were partially hidden, were submitted on Wednesday to the board, which is chaired by former UniCredit (CRDI.MI: Quote) chief executive Alessandro Profumo.

Wednesday's announcement, which broadly confirmed a preliminary estimate of the losses made by the bank last month, followed media reports that the cost to Monte Paschi from the trades could reach as high as 900 million euros.   Continued...

People are reflected in the window of a Monte Dei Paschi Di Siena bank in Rome January 29, 2013. REUTERS/Max Rossi