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Italy's Piedmont loses lawsuit over derivatives contracts
July 17, 2013 / 3:03 PM / 4 years ago

Italy's Piedmont loses lawsuit over derivatives contracts

MILAN, July 17 (Reuters) - Italian region Piedmont must pay 36 million euros ($47.3 million) plus interest to banks Dexia Crediop SpA and Intesa Sanpaolo in a dispute over derivatives contracts, a London court ruled.

This decision could influence other cash-strapped Italian local and regional governments which are losing money on derivatives contracts and decided to freeze payments due while appealing to an Italian court to void the transactions.

They could now change their strategy and choose to settle their disputes with banks.

The London lawsuit was filed by Dexia Crediop, the Italian arm of Belgian group Dexia, and Italian bank Intesa after Piedmont halted payments over interest-rate swap contracts with them in January 2012.

The region, which signed the deals in 2006 to help cover bond issues worth about 1.85 billion euros ($2.4 billion), said the transactions violated Italian law.

Piedmont had originally opened a dispute on derivative sales against Intesa, Dexia Crediop as well as Merrill Lynch, claiming it had unfairly been saddled with 54 million euros in commissions. It reached a settlement with U.S. bank Merrill Lynch last month.

The legal proceedings with Intesa and Dexia Crediop are still ongoing in Italy, however the two banks filed a counter claim against Piedmont in London.

A legal source close to the Piedmont regional government said it would likely appeal against Tuesday’s ruling at London’s High Court of Justice, although a settlement agreement with the banks has not been ruled out.

$1 = 0.7612 euros Reporting by Giulio Piovaccari; Writing by Francesca Landini; Editing by Pravin Char

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