MILAN Feb 4 Italy's market watchdog Consob has asked its British counterpart to probe a sale of Saipem shares by BofA Merrill Lynch a day before the oil services group issued a profit warning that sank the shares, a source close to Consob said on Monday.
"Consob has asked the FSA (Financial Services Authority) to look into the placement by Merrill Lynch to better understand what exactly went on," the source said.
Last Tuesday, traders said Bank of America-Merrill Lynch had placed 2.3 percent of Saipem shares on the market for 30.65 euros per share.
After the market closed on the same day, shares in Saipem plunged 34 percent to 19.97 euros after the company's new management took an axe to forecasts and painted a grim outlook for 2013.
Bofa Merrill Lynch declined to comment.
In an interview with an Italian newspaper on Sunday, Saipem Chief Executive Umberto Vergine said he had not been pre-alerted as to any placement and had learned of it from news agencies.
"Consob has asked the FSA to look into the timing of the placement and who sold shares to whom," the source said.
Consob and Saipem also declined to comment. The Financial Services Authority could not immediately be reached after hours.
Vergine, a former manager at oil major Eni, took over as CEO of Europe's biggest oil service group in December after his predecessor Pietro Franco Tali resigned in the wake of a probe into alleged corruption in Algeria.
Eni, the biggest foreign oil and gas operator in Africa, owns around 43 percent of Saipem.
"The new CEO obviously took the opportunity to clean up the balance sheet but I wasn't expecting such a severe cut and the question now must be if there's any more," a Milan-based oil analyst said on Monday.
Vergine and Chief Financial Officer Stefano Goberti met with Consob on Monday for more than two hours. The two managers left without comment.
"Consob wants to know about the timing of the profit warning, the severity and what was behind it," the Consob source said.
The profit warning, coming so soon after the Algerian probe, has exacerbated concerns some investors could be scared off. In December, investment fund Capital Research and Management cut its stake to 1.3 percent from nearly 5 percent.
Saipem said last Tuesday that while profits in 2013 would fall around 80 percent, it expected a significant rebound in 2014.