By Giselda Vagnoni
ROME Feb 5 The International Monetary Fund said
on Tuesday that Italy's central bank did a good job in its
oversight of crisis-hit Monte dei Paschi di Siena, in a boost
for ECB chief Mario Draghi, who led the Bank of Italy as Monte
Paschi ran into trouble.
An IMF team was in Italy until last week to conduct the
first part of an assessment of Italy's financial system and
Monte Paschi was among the issues it discussed with the BoI.
"The IMF team's preliminary view is that the Bank of Italy
(BoI) took timely and appropriate action - within the limits of
the legal framework - to address problems at MPS," the IMF's
chief spokesman Gerry Rice told Reuters.
"Oversight was close and supervisory action escalated
appropriately as MPS's problems became acute," Rice said in a
The central bank has been widely criticised over its
oversight of Monte Paschi, which is set to tap 3.9
billion euros of state loans and whose former management is
under investigation for fraud and other financial crimes.
The IMF's backing will be particularly welcomed by Draghi,
who was BoI governor between 2006 and 2011 when the opaque
derivatives trades Monte Paschi officials allegedly set up to
massage its accounts were conducted and came to light.
He has not yet commented on the case, but can expect to be
questioned on it by reporters at the ECB's monthly news
conference on Thursday.
The world's oldest bank has been at the centre of a
financial and political storm since last month when it revealed
that it faced losses of some 720 million euros ($986 million
from those derivatives and structured finance operations.
The BoI, which is itself being investigated by prosecutors
for an alleged lack of vigilance in a case brought by a consumer
body, has defended itself both in written statements and in
comments by current Governor Ignazio Visco.
Last month it approved the 3.9 billion euros ($5.3 billion)
of state loans needed by Monte Paschi to shore up its capital.
The BoI says it did everything in its powers to oversee
Monte Paschi, including forcing it to raise new capital and
applying behind the scenes pressure to force out its executives,
who left last year.
But the BoI has been under fire for not acting faster to
sanction those managers and make its doubts public even though
its inspectors had spotted the derivatives contracts at the
centre of the scandal back in mid-2010..
Monte Paschi's woes stem back to its 2007 acquisition of
smaller rival Antonveneta for 9 billion euros in cash from
Spain's Santander just a few months after Santander had bought
it for 6.6 bln euros.
Senior bankers questioned why the Bank of Italy, then led by
Mario Draghi, allowed MPS to undertake the operation, which
stretched its finances to the limits. Prosecutors now suspect
bribes were paid to facilitate the deal.
The Vatican on Tuesday denied an Italian newspaper report
linking its IOR bank to Monte Paschi's takeover of Antonveneta.
Prosecutors on Monday called Monte Paschi's former chairman
Giuseppe Mussari for questioning for the first time but then
accepted his request to have the interrogation postponed to
Thursday because some members of his legal team were absent.
The scandal is also a burning political issue, three weeks
before Italians vote in a national election on Feb. 24-25,
because of the tight links between Monte Paschi and regional
politicians - mainly on the left - who dominate the shareholder
foundation which controls the 540-year-old bank.