* Deutsche Bank lawyers met Italian prosecutors
* Meeting follows seizure order against Nomura
* Deutsche Bank declines to comment
(Adds further details, background)
By Silvia Ognibene
SIENA, Italy, April 22 Lawyers for Deutsche Bank
met Italian prosecutors investigating loss-making
trades at Italian bank Monte dei Paschi on Monday to
avoid any risk of a seizure order, three sources with direct
knowledge of the matter told Reuters.
A financial derivatives deal known as "Santorini" in 2008
between Deutsche Bank and Monte dei Paschi di Siena is one of
three trades at the heart of a probe into alleged fraud at
Italy's third biggest lender.
The trades exacerbated a capital shortfall that last year
forced Monte dei Paschi to request 4 billion euros ($5.2
billion) of state aid and brought it close to collapse.
Prosecutors in Siena last week ordered the seizure of up to
1.95 billion euros from Japanese bank Nomura, which
carried out another derivatives deal, known as "Alexandria, with
the Tuscan bank.
In the seizure warrant against Nomura, the Siena prosecutors
describe the Alexandria and Santorini trades as "twin"
"They (Deutsche Bank) are seeking a dialogue with the
prosecutors given the similarities between Alexandria and
Santorini," one of the sources said.
"They want to avoid becoming the target of a seizure measure
like the one for Nomura," the source said.
Deutsche Bank declined to comment. The German bank has
rejected any suggestion of wrongdoing, saying that the Santorini
deal was subject to rigorous internal approval processes.
Like the Alexandria trade, the Santorini deal involved the
purchase of around 2 billion euros of Italian government bonds
by Monte dei Paschi financed through a long-term repurchase
agreement with Deutsche Bank.
Both deals were done under Monte dei Paschi's previous
management to conceal losses, prosecutors say.
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.
In the case of the trade with Nomura, Monte dei Paschi had
deposited 1.87 billion euros by way of collateral as of April 5,
the prosecutors said in their seizure order, explaining their
move with the need to stem losses at the Siena-based bank.
Asked whether the prosecutors could move against Deutsche
Bank as they have done with Nomura, the source said this
The seizure order against Nomura, which must be ratified by
a judge in the next few days, faces a series of legal hurdles.
The Siena prosecutors first tried to freeze funds held by Nomura
in Germany through Europe's Target 2 interbank payment system,
asking the Bundesbank to intervene.
But the German central bank declined to do anything and a
source close to the ematter said it could not enforce any such
seizure request without a ruling by a German court.
(Writing by Silvia Aloisi; Editing by Greg Mahlich)