ROME — The ailing lender Monte dei Paschi di Siena said Thursday that it had lost nearly €3.2 billion in 2012, an improvement from the €4.7 billion it lost in 2011, but still worse than analysts had expected.
The bank blamed a difficult Italian economy, as well as its own internal problems, which its new managers described as graver than they had anticipated.
The loss for 2012, equal to $4.1 billion, compares with an average estimate for a loss of €2.5 billion in a Reuters poll of eight banks and brokerages.
The Tuscan bank, hit by a trading and bad-loan scandal, said that in 2012 it set aside about €2.7 billion to cover possible loan losses. The bank also booked a pretax loss of €730 million as it restated the value of derivatives deals that are at the center of the scandal that has engulfed an institution founded in 1472.
But the bank said it had a solid portfolio of assets and its new chief executive said the financial results were, unlike past reports, a model of transparency.
“This balance sheet is a turning point and reports a bank that is very different from the recent past,” the chief executive, Fabrizio Viola, told investors in a conference call, adding that the new management’s review of the bank’s finances were complete and that there were no more unwelcome surprises lurking in the books.
The bank said revenue for 2012 declined 6.2 percent from the year before, due in part to a steep fall in net interest income and a slip in fees and commissions.
Mr. Viola said the bank had reduced its operations by 11 percent, taking a one-off charge of €311 million for the restructuring.
The lender, based in Siena, has been at the center of a financial and political storm since January, when it emerged that Mr. Viola, appointed as the chief executive in 2012, had found a suspect exchange of letters between Monte dei Paschi and Nomura, an investment bank, hidden in a safe. The following month, the bank disclosed losses of €730 million related to three structured product transactions, one of which was with Nomura.
The transactions came under scrutiny by prosecutors in Siena, who had opened an investigation into the lender’s financial troubles and the alleged bribes that brought the world’s oldest operating bank to its knees and led it to request a €4.1 billion bailout from the Italian government. In their latest action, magistrates this week directed financial police to search Nomura’s offices in Milan for documents related to one of the suspect transactions.
Monte dei Paschi has begun legal action to retrieve some of the losses and sued Deutsche Bank and Nomura, as well as two former executives of the Siena bank, over two of the financial transactions that were responsible for most of the losses.
The bank’s current management decided to sue the former chief executive, Antonio Vigni, over the so-called Santorini trade, a transaction with Deutsche Bank in 2008 that eventually resulted in a €305.2 million loss for Monte dei Paschi. It also filed a lawsuit against the bank’s former chairman, Giuseppe Mussari, for a 2009 deal with Nomura, called “Alexandria,” which resulted in losses of €273.5 million.
Monte dei Paschi’s problems began with its acquisition in 2008 of the regional lender Antonveneta for €9 billion, a price analysts say was wildly inflated. In the wake of that deal, Monte dei Paschi used transactions like “Alexandria” and “Santorini” in an attempt to raise money without eroding its capital base.
But the financial instruments were not disclosed to regulators, according to prosecutors and the Bank of Italy, the country’s central bank, and later resulted in steep losses. Some of the bank’s former executives are under investigation by the prosecutors in Siena.
As part of its efforts to rehabilitate its finances and its reputation, the bank brought in a new management team, including Mr. Viola and a new chairman, Alessandro Profumo.
The lender is also in the process of closing hundreds of branches and is cutting more than 4,000 jobs.
Article source: http://www.nytimes.com/2013/03/29/business/global/monte-dei-paschi-announces-loss-for-2012.html?partner=rss&emc=rss
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