Monte dei Paschi CEO says probe 'emotionally difficult'

Fri Aug 19, 2016 1:39pm EDT
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By Valentina Za and Stephen Jewkes

MILAN (Reuters) - The latest judicial probe into Monte dei Paschi di Siena (BMPS.MI: Quote) is a procedural necessity but it could still damage Italy's third-largest bank as it seeks to solve its financial woes, the lender's chief executive said on Friday.

CEO Fabrizio Viola and former chairman Alessandro Profumo are under investigation for alleged false accounting and market manipulation in a case involving derivatives trades, Reuters reported on Thursday.

The probe, which began last year, hits the Tuscan lender as it readies a 5 billion euro ($6 billion) stock sale to strengthen its balance sheet after emerging as the weakest bank in Europe in July stress tests.

"It is with confidence in the judicial system and serenity about the correctness of our actions that I await the quick clarification of the situation," Viola said in a statement.

"I cannot hide that it is emotionally difficult for me as well as for the bank, considering the enormous efforts of these past four years to restore it to health, to witness further negative effects from past events and other people's actions."

The share issue is part of a broader rescue plan engineered to prevent the world's oldest bank being wound up and help the Rome government stabilize the entire banking sector.

Viola reiterated the bank's position that the inquiry was obligatory following a complaint by a shareholder but flagged a risk that it could be "wrongly interpreted at a time when plans we're strenuously carrying out draw a lot of attention."

Prosecutors in Siena allege the bank did not correctly book two derivatives trades known as Alexandria and Santorini between 2011 and 2014. The file has now been transferred to Milan where prosecutors have 18 months to decide whether or not to seek trial for Viola and Profumo.   Continued...

Monte Dei Paschi di Siena (MPS) CEO Fabrizio Viola attends a FABI meeting in Milan, Italy, February 12, 2016.  REUTERS/Stefano Rellandini