By Manuela D'Alessandro
MILAN, March 7 A Milan appeals court has
acquitted four international banks, including JPMorgan
and UBS, found guilty in an earlier trial of
mis-selling derivatives to the city of Milan.
Depfa Bank, Deutsche Bank, JPMorgan
and UBS had appealed against a landmark verdict from December
2012 ordering the seizure of 89 million euros ($123 million) and
fines of 1 million euros for each of the banks.
The original trial was the first of its kind in Italy, where
hundreds of local governments entered opaque and risky
derivatives deals that turned sour. Many of them have since
taken lenders to court to solve their disputes.
The appeals court said on Friday that the four banks had no
case to answer. It cancelled the fines and seizure of funds, and
also acquitted nine bank employees who had been handed suspended
jail sentences of up to eight months.
Milan prosecutor Piero De Petris last month asked for the
individual fines and the seizure to be upheld, with only a small
reduction for JPMorgan. He also asked for jail sentences of
about six months for four of the nine bank employees.
The prosecutor has 90 days to challenge Friday's verdict by
filing an appeal with Italy's highest court. De Petris said a
decision would take some time.
"One must first read the sentence," he told reporters.
The case relates to a swap contract signed by the city of
Milan council when it issued a 1.68 billion euro 30-year bond in
2005. The banks were accused of making 100 million euros in
illicit profit and lying about the risks linked to the deal.
Deutsche Bank, JPMorgan and UBS all welcomed the verdict,
while Depfa made no immediate comment on the decision.
"The only thing better than saying there is no case to
answer would be an apology," UBS's lawyer Fabio Cagnola told
Italy's 2014 budget law has rendered permanent a ban
introduced by the Treasury in 2009 to prevent local authorities
from signing new derivatives contracts, though they can still
restructure old deals.
In June last year a total of 275 local governments held 536
derivatives contracts on underlying liabilities worth 27.5
billion euros, Treasury data show.