By Massimo Gaia
MILAN, April 18 Italian tax police descended on
the Milan offices of JP Morgan on Thursday in search of
documents in their investigation into suspected fraud at Monte
dei Paschi bank, as a scandal rocking Italian finance spreads to
foreign banks doing business there.
The arrival of police at the central Milan office of the
U.S. bank comes two days after Italian prosecutors moved to
seize up to 1.95 billion euros ($2.54 billion) from Nomura,
Japan's largest broker.
"The tax police are here to acquire documents and we are
handing them over to them," Giorgio Perroni, a lawyer for the
U.S. investment bank, told reporters. JP Morgan has repeatedly
denied any wrongdoing, and a source close to the investigation
said the U.S. bank was not itself under investigation.
"They have given the documents that were asked for, they are
cooperating," the source said.
JP Morgan helped Banca Monte dei Paschi di Siena
to finance its 9 billion euro purchase in 2007 of rival
Antonveneta bank through a 1 billion euro hybrid bond.
JP Morgan is also one of the foreign banks, along with
Nomura and Deutsche Bank, that entered into derivatives deals
that imposed huge losses on Monte dei Paschi after the
Antonveneta deal. Nomura and Deutsche also deny wrongdoing.
Italian authorities say Monte dei Paschi was brought to the
verge of collapse by overpaying for Antonveneta and making bad
trades with foreign banks, in deals that were often hidden from
regulators and intended to camouflage losses.
Prosecutors are investigating whether the missteps, which
forced the Italian state to bail out the 500-year-old bank with
a 4 billion euro ($5.2 billion) loan, were the result of fraud
or kickbacks paid under former Monte dei Paschi management.
Two investigative sources told Reuters on Thursday that
Siena prosecutors had asked tax police to visit JP Morgan's
offices in central Milan to seek documents relating to
Monte dei Paschi's acquisition of Antonveneta.
Italy is seeking the help of other European countries to
carry out its seizure of cash from Nomura, held in accounts with
other banks in Frankfurt and London.
Prosecutors say their goal is to block Monte dei Paschi from
losing more money to the Japanese broker over a deal called
"Alexandria", a bet on Italian government bonds made more costly
by an interest rate swap unfavourable when rates fell.
Monte dei Paschi has posted losses of 730 million euros from
bad derivatives deals including Nomura's Alexandria, a
similarly large trade called Santorini made with Deutsche bank
and, to a lesser extent, another called Nota Italia with JP
A source told Reuters this week that prosecutors could
consider action against Deutsche Bank similar to the steps taken
against Nomura, but that the investigation into the Santorini
deal was not yet as advanced as the probe into Alexandria.
Flavio Valeri, the head of Deutsche Bank in
Italy, told Reuters on Thursday that the German bank had not
been informed of any possible proceedings against it by the
The prosecutors' seizure order against Nomura described the
Santorini and Alexandria deals as twins. However, a banking
source with knowledge of the matter said Italian authorities
were differentiating between the two deals.
"Deutsche Bank does not expect anything similar (to the
seizure order against Nomura) and is not preparing for such a
case," the banking source said.