* Monte Paschi, Nomura in dispute over derivatives deals
* Separate legal proceedings in Italy and London
* UK judge rejects Monte Paschi's bid to halt UK case
* Monte Paschi shares fall on ruling
By Estelle Shirbon
LONDON, Oct 24 A British court has allowed
Japanese bank Nomura to go ahead with legal action
against Monte dei Paschi di Siena over risky
derivatives trades that got the Italian bank into trouble.
The complex deals agreed in 2009 between the two banks are
already the subject of criminal investigations in Italy. Monte
dei Paschi is seeking 700 million euros ($965 million) in
damages from Nomura and others in a Florence court.
The ruling from the High Court in London is the latest blow
to the Italian bank which received a 4.1 billion euro state
bailout this year and faces the prospect of nationalisation if
it cannot pull off a substantial capital increase.
Nomura, which denies any wrongdoing, launched its own legal
action against Monte dei Paschi in London in March, seeking a
series of declarations including that the contracts between the
banks are valid.
Monte dei Paschi responded by challenging the jurisdiction
of the British court over the matter.
On Thursday, Mr Justice Eder ruled in favour of the Japanese
"I reject the application by Banca Monte dei Paschi di Siena
and refuse to order a stay of these English proceedings," the
judge said in a very brief court hearing.
Monte dei Paschi's shares fell more than 3 percent shortly
after the ruling was announced but pared losses to trade 0.9
percent lower at 1104 GMT.
A Nomura spokesman said the bank will continue to take all
necessary steps to protect its position.
There was no immediate comment from Monte dei Paschi.
The dispute between the two banks stems from a series of
agreements including an asset swap transaction, a long-term repo
and a repurchase facility agreed in 2009.
Monte dei Paschi alleges that its former chairman Giuseppe
Mussari and former general manager Antonio Vigni colluded with
Nomura to set up these opaque structured finance transactions to
conceal losses of about 220 million euros which had accrued
under an earlier investment known as the Alexandria Notes.
So far, the High Court has not delved into the substance of
the dispute but has dealt with a series of legal issues to
determine whether it had jurisdiction to hear Nomura's case
against Monte dei Paschi.
Eder's 26-page ruling said that although the arguments of
both sides were finely balanced, it would not be in the interest
of justice to halt the English proceedings.
One of the points he took into account was the amount of
time it would take for the dispute to make its way through the
Italian justice system.
"The nature of the dispute and the very significant sums
involved in the present case make it highly desirable that the
issue of the validity and enforceability of the agreements is
determined as swiftly as possible," the judge wrote.