Paschi Says 2011 Loss Would Swell If Loans Accounted for as CDSs
By Elisa Martinuzzi - Apr 5, 2013 8:27 PM GMT+0200
Banca Monte dei Paschi di Siena SpA, the Italian lender engulfed by probes into alleged misconduct by former managers, said its 2011 loss will widen by 1 billion euros ($1.3 billion) if two so-called repos are accounted for as credit-default swaps.
The 2011 net loss for group’s main company rises to 5.7 billion euros from 4.7 billion euros under pro-forma accounts that restate deals dubbed Alexandria and Santorini, the bank said in its annual report published today. The 2012 loss falls to 2.9 billion euros from 3.1 billion euros, and net assets to 191.7 billion euros from 197.1 billion euros.
Paschi calculated the impact of a different accounting treatment at the request of Italian regulators, which on March 8 urged financial firms to examine repo contracts “closely.” A consumer group that challenged Monte Paschi’s bailout alleged in a court filing in February that the bank was misrepresenting derivatives transactions as loans.
In the two transactions that weren’t fully disclosed to shareholders, the bank made money-losing bets on the country’s government bonds in structured deals disguised as loans that hid existing losses. The bank restated its accounts to reflect the hidden losses on Feb. 6. Bloomberg News first reported on Santorini on Jan. 17.
To contact the reporter on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
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