MILAN (Reuters) - The scandal surrounding Banca Monte dei Paschi di Siena (BMPS.MI) is an isolated case and there is no risk of contagion for the Italian banking system, the chief executive of Italy’s top retail bank Intesa Sanpaolo (ISP.MI) said on Tuesday.
“It’s an isolated case around which, for various reasons, completely unfounded opinions have been formed,” Enrico Cucchiani told Il Corriere della Sera in an interview.
But Cucchiani said the banking system could be at risk if the state aid pledged to the bank were not forthcoming.
“The truth is that the Monti bonds safeguard savers and the real economy: if Monte Paschi got stuck then there’d be a systemic risk,” he said.
Monte Paschi, Italy’s No. 3 lender, has run into difficulty since its 9-billion-euro cash purchase of Banca Antonveneta in 2007 and has become embroiled in a derivatives-related scandal.
It is dependent on a 3.9-billion-euro package of state support, offered through so-called Monti bonds, which was cleared by the Bank of Italy on Sunday.
Cucchiani said derivatives and speculation were essential for the functioning of the real economy.
“But medicine, like penicillin, can cure or, if abused, have the opposite effect,” he said.
Reporting by Stephen Jewkes; Editing by Mark Potter