April 26, 2013 / 5:48 AM / 6 years ago

Italy freezes Nomura assets in Monte Paschi probe

TOKYO/SIENA (Reuters) - Nomura Holdings Inc (8604.T) said on Friday Italian prosecutors had frozen its assets in Italy in connection with a high-profile investigation over a derivatives contract with local lender Banca Monte Dei Paschi di Siena (BMPS.MI).

The entrance of Monte Dei Paschi bank headquarters is pictured in Siena January 24, 2013. REUTERS/Stefano Rellandini

Nomura Chief Financial Officer Shigesuke Kashiwagi said his bank had been informed on April 23 that Nomura Bank International’s (NBI) assets in Italy had been frozen.

Kashiwagi said Nomura believed the move was unwarranted and said the action would have no impact on the settlement of the Japanese bank’s trades across Europe and the assets were small.

Prosecutors investigating risky derivatives trades that have endangered Monte Paschi’s survival ordered on April 16 the seizure of around 1.8 billion euros of assets from Nomura in connection to the probe.

The trades include a structured deal known as ‘Alexandria’, done with Nomura, a similar trade called ‘Santorini’, with Deutsche Bank (DBKGn.DE) and a smaller deal called ‘Nota Italia’, done with JP Morgan (JPM.N).

The frozen assets include a “small amount of cash and receivables”, Kashiwagi said at an earnings briefing.

“These assets will remain the property of NBI, but pursuant to the prosecutor’s order, may not be withdrawn,” the CFO said, adding the bank would attempt to talk with prosecutors to resolve the situation.

Assets of Nomura’s Milan branch were not frozen as this account is used for funding day-to-day operations, he added.

Nomura did not disclose the amount of the frozen assets. A source close to the case told Reuters Italian prosecutors had frozen around 140 million euros ($182 million) in Italy.

The investigation into Monte Paschi is politically sensitive as the Tuscan bank had strong links with local center-left party leaders.

Apart from the Italian assets, prosecutors have been unable to get their hands on any Nomura assets after the Bundesbank turned down a request to block Nomura assets in Germany.

According to Italian law, the order to freeze Nomura’s assets needs to be confirmed by an Italian judge, at the latest on Saturday, or it will become void.

Monte dei Paschi, Italy’s third-largest bank, was forced to book losses of nearly 1 billion euros after disclosing details of the complex derivatives deal.

The bank had already been weakened by the euro zone crisis and has been forced to accept help from the state in the form of 4 billion euros of state bonds to meet tough capital requirements set by European regulators.

Monte dei Paschi Fabrizio Viola said in an interview published on Monday the bank could hold a planned 1 billion euro capital increase next year and did not rule out more asset sales to reinforce its balance sheet and avoid nationalisation.

“We think that conditions will be right to hold the capital increase in 2014,” Viola said in an interview, adding the offering would be aimed primarily at institutional investors.

Monte dei Paschi will hold a shareholder meeting on Monday.

Writing by Lisa Jucca; Editing by Elaine Hardcastle

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