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| Italy's finance minister defends role of government in bank scandal | Italy's finance minister defends role of government in bank scandal |
| (8 days later) | |
| Italy's finance minister has defended the roles of the government and the central bank in the scandal surrounding the state-backed Banca Monte dei Paschi di Siena. | Italy's finance minister has defended the roles of the government and the central bank in the scandal surrounding the state-backed Banca Monte dei Paschi di Siena. |
| Vittorio Grilli was appearing before the parliamentary finance committee to explain the decision to grant the lender a €3.9bn (£3.3bn) package of state support. | Vittorio Grilli was appearing before the parliamentary finance committee to explain the decision to grant the lender a €3.9bn (£3.3bn) package of state support. |
| As investigations into a series of loss-making transactions at the 500-year-old bank continued to dominate Italian politics, less than a month before the country's parliamentary election, Grilli said the Bank of Italy, which also acts as the financial regulator, had provided oversight that proved "continuous, attentive [and] appropriate". | As investigations into a series of loss-making transactions at the 500-year-old bank continued to dominate Italian politics, less than a month before the country's parliamentary election, Grilli said the Bank of Italy, which also acts as the financial regulator, had provided oversight that proved "continuous, attentive [and] appropriate". |
| Questions have been raised over whether the central bank, which was run from 2005 to 2011 by the European Central Bank chief, Mario Draghi, did enough to keep the Tuscan bank in check during a time of expansion and subsequent crisis. | Questions have been raised over whether the central bank, which was run from 2005 to 2011 by the European Central Bank chief, Mario Draghi, did enough to keep the Tuscan bank in check during a time of expansion and subsequent crisis. |
| But Grilli, who met Draghi on Monday, said the regulator had begun inspections of the bank in 2010 and had imposed a "sanctions procedure" to penalise its management for failing to develop adequate control mechanisms. | But Grilli, who met Draghi on Monday, said the regulator had begun inspections of the bank in 2010 and had imposed a "sanctions procedure" to penalise its management for failing to develop adequate control mechanisms. |
| "An intense activity of supervision allowed the identification and prevention of anomalous behaviour," Grilli, a member of Mario Monti's outgoing technocratic government, told the committee. | "An intense activity of supervision allowed the identification and prevention of anomalous behaviour," Grilli, a member of Mario Monti's outgoing technocratic government, told the committee. |
| The government itself has come under fire during the Monte dei Paschi affair for giving the thumbs-up to a package of €3.9bn bailout bonds the Bank of Italy approved at the weekend, and which is expected to be issued next month. | The government itself has come under fire during the Monte dei Paschi affair for giving the thumbs-up to a package of €3.9bn bailout bonds the Bank of Italy approved at the weekend, and which is expected to be issued next month. |
| The Siena-based bank, which is Italy's third-largest lender, says previously unaccounted-for losses incurred on three derivatives contracts under previous management could total more than €700m. | The Siena-based bank, which is Italy's third-largest lender, says previously unaccounted-for losses incurred on three derivatives contracts under previous management could total more than €700m. |
| The Bank of Italy has said that while it was aware of risky practices at Monte dei Paschi, it had not realised the "true nature" of the contracts in question until new management, under the chief executive Fabrizio Viola, found a key document in a safe last October. | The Bank of Italy has said that while it was aware of risky practices at Monte dei Paschi, it had not realised the "true nature" of the contracts in question until new management, under the chief executive Fabrizio Viola, found a key document in a safe last October. |
| Grilli said the bailout should not be considered a rescue for a "bank in default" but rather a "reinforcement of capital". | Grilli said the bailout should not be considered a rescue for a "bank in default" but rather a "reinforcement of capital". |
| In a statement, the financial committee said Montepaschi, as it is commonly known, remained fundamentally solid, and insisted that its troubles should not cast doubt on the rest of the sector. "The institution has, overall, a solid capital situation and the tensions it has faced will not produce an effect on the Italian banking system as a whole," it said. | In a statement, the financial committee said Montepaschi, as it is commonly known, remained fundamentally solid, and insisted that its troubles should not cast doubt on the rest of the sector. "The institution has, overall, a solid capital situation and the tensions it has faced will not produce an effect on the Italian banking system as a whole," it said. |
| Grilli said: "The regulator has given a positive evaluation of the bank, and so it does not need to be put under special administration." | Grilli said: "The regulator has given a positive evaluation of the bank, and so it does not need to be put under special administration." |
| The scandal at Monte dei Paschi stems from its acquisition in 2007 of its Italian rival Banca Antonveneta for a price – €9bn – thought to be significantly more than the company's true value. It has rocked Italian politics just over three weeks before the nation goes to the polls. The institution, which describes itself as the world's oldest bank, has close ties to the frontrunners in the election race, the leftwing Partito Democratico (PD). | The scandal at Monte dei Paschi stems from its acquisition in 2007 of its Italian rival Banca Antonveneta for a price – €9bn – thought to be significantly more than the company's true value. It has rocked Italian politics just over three weeks before the nation goes to the polls. The institution, which describes itself as the world's oldest bank, has close ties to the frontrunners in the election race, the leftwing Partito Democratico (PD). |
| Prosecutors in Siena are investigating allegations of bribery in connection with the Antonveneta acquisition. On Monday, Viola said he had considered the €9bn price to be high but he had seen no evidence of bribes to secure the deal, which secured Monte dei Paschi's standing in the banking sector but robbed it of precious capital just before the financial crisis. | Prosecutors in Siena are investigating allegations of bribery in connection with the Antonveneta acquisition. On Monday, Viola said he had considered the €9bn price to be high but he had seen no evidence of bribes to secure the deal, which secured Monte dei Paschi's standing in the banking sector but robbed it of precious capital just before the financial crisis. |
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