By Silvia Aloisi and Stefano Bernabei
SIENA, Italy Feb 7 Italy's Monte dei Paschi
said there were no more derivatives losses beyond the
730 million euros ($988 million) it has disclosed, which have
rattled financial markets and become a campaign issue ahead of
The derivative trades are at the heart of a fraud probe into
former management of the world's oldest bank, raising doubts
about the effectiveness of banking supervisors, including
European Central Bank chief Mario Draghi, who was Bank of Italy
governor from 2006 to 2011, and the role of politicians, who
agreed a state bailout for the lender.
Later on Thursday at an ECB news conference, Draghi is
likely to be asked how much he knew of the trades.
Facing a grilling from analysts at a conference call a day
after the bank revealed the full extent of the losses linked to
three derivative contracts, the bank's management also said on
Thursday the Treasury was likely to take a stake in the lender
"There are no more Santorini," Chief Executive Fabrizio
Viola said, referring to one of the three trades at the heart of
a fraud probe into former management of the bank.
It said late on Wednesday the loss linked to the three
trades - Santorini with Deutsche Bank, Alexandria with Nomura
and Nota Italia with J.P. Morgan - would affect its 2012
net asset position, but has yet to determine the impact on its
The bank's shares were up 6.7 pct at 0.246 euros at 1140
The bank's woes spiralled out of control in the wake of the
9-billion-euro acquisition of smaller rival Antonveneta in 2007,
which left Monte Paschi badly weakened just before the global
financial crisis erupted.
After being further hit by the euro zone's debt crisis,
Monte dei Paschi last month won final approval for a 3.9 billion
euro state bailout, the only Italian lender to need one.
As elections near on Feb. 24-25, former prime minister
Silvio Berlusconi, leading the centre-right's election charge,
has used the bank's woes to attack both his centre-left rivals
and outgoing prime minister Mario Monti, whose Treasury approved
The findings of an internal review of the trades, which the
bank's current chiefs say were partially hidden, were submitted
on Wednesday to the board, and may lead to a restatement of past
"NO MORE SKELETONS"
Viola and Chief Financial Officer Bernardo Mingrone were
asked repeatedly by analysts whether there may be more skeletons
in the bank's closet, and why the problematic trades had not yet
They said the review of the bank's entire financial
portfolio was now complete, ruling out further losses, and that
the trades had been restructured but were still in place because
it was not convenient to terminate them.
The loss from the trades will likely increase the overall
2012 losses for the Tuscan lender, which had already posted a
net loss of 1.66 billion euros in the first nine months.
Sources close to the matter have told Reuters the bank has
been negotiating with Deutsche Bank and Nomura to restructure or
close the deals. One source said the negotiations with Deutsche
Bank were going well, while those with Nomura were dragging.
Deutsche Bank and Nomura declined to comment.
Mingrone also told analysts that the bank would pay a 2012
coupon of 171 million euros on existing bonds the state holds by
issuing more bonds. That option would not be possible in future,
so if, as expected, the bank does not make enough profit in 2013
to pay the coupon in cash, it will issue shares to the Treasury
instead. Mingrone confirmed that the likely scenario.
Viola also sought to reassure investors and current account
holders by saying there had no been no run on the bank's
deposits despite all the bad publicity surrounding the scandal.
Asked about reports of interest for the bank from BNP
Paribas or from Italy's biggest retail lender, Intesa
Sanpaolo, Viola said: "Right now there is nothing."