MILAN, April 24 Monte dei Paschi had
to put up more than 2.8 billion euros ($3.65 billion) by way of
collateral for two loss-making derivatives trades at the centre
of an investigation of alleged fraud at Italy's third-biggest
The Tuscan bank said in a statement on Wednesday that it had
provided collateral of 1.871 billion euros at the end of March
for the derivative deal known as "Alexandria" with Japanese bank
The bank also said it had put up a collateral of 939.1
million euros linked to the "Santorini" deal signed in 2008 with
Under the risky deals at the heart of the probe, Monte dei
Paschi funded its investment in long-term Italian government
bonds through long-term repurchase agreements with Nomura and
In a repurchase, or repo, agreement, a company uses assets
as collateral to raise funds and pledges to buy the assets back
for a pre-agreed price at a later date.
But as the value of the bonds guaranteeing the loans fell
because of the euro zone crisis, the bets backfired and Monte
dei Paschi was forced to put up more collateral with both banks.
Monte dei Paschi received state aid of 4 billion euros in
February to plug a capital shortfall exacerbated by the
Prosecutors in Siena last week ordered the seizure of up to
1.95 billion euros from Nomura as part of the investigation of
the risky derivative trades, which they believe were used to
conceal losses at the bank.
Deutsche Bank and Nomura have denied any suggestion of
wrongdoing in their dealings with Monte dei Paschi.
In the statement, Monte dei Paschi said the Santorini and
Alexandria contracts had a negative impact of around 117 million
euros on its interest margin in 2012. It also said the two
operations will have a negative impact of 16 million euros on
its interest margin target for 2015.
($1 = 0.7695 euros)
(Reporting by Antonella Ciancio and Silvia Aloisi; Editing by