Italy's Monti steps into Monte Paschi scandal

Thu Jan 24, 2013 5:14pm EST
 
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By Stephen Jewkes and Silvia Aloisi

MILAN (Reuters) - Italian Prime Minister Mario Monti weighed in on the scandal surrounding Banca Monte dei Paschi di Siena on Thursday, rejecting suggestions that the authorities had failed to spot large trading losses threatening the bank.

Already in need of a 3.9 billion euro bailout, Monte dei Paschi this week revealed loss-making derivatives trades that could cost it as much as 720 million euros (US$956 million), lurching center stage in a crucial general election campaign.

Seizing on the bank's historical links to the center-left PD party, center-right and far-left politicians canvassing for votes on February 24-25 have accused the PD of mismanaging the bank and have criticized Monti for using taxpayer money to save it. The PD is leading in opinion polls.

"Monte Paschi is worse than the Parmalat case. They tried to save Monte Paschi with an amount equal to what Italians have paid for (housing tax) IMU," center-right MP Stefano Saglia said in a note on Thursday.

Monti responded: "I don't think there is an issue of (regulatory) oversight." Speaking at a news conference on the sidelines of the World Economic Forum in Davos he added that he was ready to discuss the issue in parliament.

Monte Paschi said its board was shocked by how its situation was being used by politicians for campaign motives before the elections.

"The board ... is bewildered for how superficially the issue of recapitalization of the bank is being treated," the bank said. "The situation is completely under control".

Italy's President Giorgio Napolitano on Thursday described the situation at the bank as a "serious issue" and said he was confident the Bank of Italy would handle the case.   Continued...

 
Outgoing Italian Prime Minister Mario Monti addresses the annual meeting of the World Economic Forum (WEF) in Davos January 23, 2013. REUTERS/Denis Balibouse