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Milan court orders trial over Monte dei Paschi trades - legal sources
October 1, 2016 / 12:24 PM / a year ago

Milan court orders trial over Monte dei Paschi trades - legal sources

The entrance of the Monte dei Paschi bank headquarters is seen in Siena, central Italy, January 29, 2016. Merger talks between Italian cooperative lenders Banco Popolare and Banca Popolare di Milano (BPM) took a big step forward on Thursday when Rome backed a tie-up. REUTERS/Max Rossi

(This version of the October 1st story corrects to clarify in first 2 paragraphs that Monte dei Paschi reached a plea bargain and was not sent to trial)

MILAN (Reuters) - A Milan court has ordered Deutsche Bank (DBKGn.DE) and Nomura (8604.T) to stand trial for a string of alleged financial crimes relating to Banca Monte dei Paschi di Siena (BMPS.MI), legal sources said on Saturday.

Monte dei Paschi separately reached a plea bargain with prosecutors after it was also investigated over similar allegations, the sources said.

The court also indicted 13 former and current managers from the three banks over the case, with prosecutors alleging they used complex derivatives trades to conceal losses at Monte dei Paschi, Italy’s third largest lender, the sources said, adding that the trial will start on Dec. 15.

All those indicted have previously denied any wrongdoing.

Investors stand in front of a screen showing the logo of Nomura Holdings in Tokyo, Japan, December 1, 2015. REUTERS/Toru Hanai/File Photo

The alleged crimes relate to the 2008-2012 period and include market manipulation and obstructing supervisory activity as well as false accounting, the sources said.

The allegations centre on two derivatives transactions, known as Santorini and Alexandria, which Monte Paschi’s former management arranged with Deutsche Bank and Nomura to conceal losses, prosecutors have said.

A Deutsche Bank logo adorns a wall at the company's headquarters in Frankfurt, Germany June 9, 2015. REUTERS/Ralph Orlowski/File Photo

Since then, Monte dei Paschi has been bailed out by the Italian government and has had to raise billions of euros from investors to stay afloat. The bank is now seeking a further 5 billion euros ($5.60 billion) in capital as part of its latest rescue plan.

Under Italian law, a company can be held responsible if it is deemed that it failed to prevent, or attempted to prevent, a crime by an employee that benefited the company.

Amongst those being sent to trial are Monte dei Paschi’s ex-chairman Giuseppe Mussari and its ex-general manager Antonio Vigni, as well as six former Deutsche Bank staff and two Nomura employees.

The case also involves a hybrid financial instrument which Monte dei Paschi used to partly fund its disastrous 2007 acquisition of rival bank Antonveneta. It paid some 9 billion euros for the lender, helping to sink its accounts.

Reporting by Manuela D'Alessa; Writing by Crispian Balmer; Editing by Alexander Smith

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