Oldest Bank In The World Plunges, Halted As Chairman Resigns In Aftermath Of Latest Derivatives Fiasco

Tyler Durden's picture

Last week, following documentation from Deutsche Bank (and Nomura), it became clear that Italy's Monte Paschi (BMPS) bank (the oldest in the world) has engaged in derivatives with the German and Japanese banks in order to save itself during the financial crisis. The derivatives, according to Bloomberg, were done off-market and allowed the booking of large upfront gains which covered losses optically that the bank faced as European liquidity dried up completely - the offsetting 'losses' are now coming due. Today, amid growing outcry over the 'deal', the former head of BMPS has resigned. Bloomberg reports that Giuseppe Mussari, now Italy's top banking lobbyist, was the Chairman of BMPS during the derivative deal period. BMPS shares were halted after plunging dramatically as investors are still unclear of the extent of losses it faces on derivatives. If that was not enough chicanery, there is a twist in that none other than Mario Draghi, as Director of the Bank of Italy, would have had to vet Mussari (and his banks' regulated books) during this period - as BMPS accumulated what is obviously undocumented derivatives positions to intentionally obscure losses. Once again, years later, it seems the truth comes out - and of course we would expect no-one to go to jail - and the lying in Europe (then and now) continues unabated - as the reality of financial system health remains hidden from view.


Via Bloomberg,

Former Banca Monte dei Paschi di Siena SpA Chairman Giuseppe Mussari quit as Italy’s top banking lobbyist as scrutiny of the lender’s use of derivatives deepens.


The resignation is effective immediately, he said in a letter posted to the Italian Banking Association today. He leaves as Monte Paschi, where he was chairman from 2006 until April, comes under growing pressure to disclose the extent of losses it faces on derivatives.


The lender fell 5.7 percent to 27.75 cents in Milan trading today, the biggest decliner in Europe’s 46-member Stoxx 600 Banks Index, after Il Fatto Quotidiano reported Monte Paschi’s former managers signed contracts with Nomura Holdings Inc. (8604) three years ago that will reduce 2012 earnings by 220 million euros ($293 million). Nomura said in a statement Mussari “fully reviewed and approved” the trade.


I always acted according to the law,” Mussari, 50, wrote. “I took the decision to not damage the association.”


Monte Paschi said on Jan. 17 it will review its accounts after Bloomberg News first reported that the lender engaged in a derivative with Deutsche Bank AG in 2008 that obscured losses before the Siena-based bank sought a government bailout. The Italian lender, which was bailed out in 2009, is seeking 500 million euros more from taxpayers, bringing the total cost of its rescue to 3.9 billion euros.

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fightthepower's picture

Fuck you Rothschilds, Fuck you Bernanke!

GetZeeGold's picture



When the worlds oldest bank steals the money from the worlds oldest profession.....you know it's bad.

knukles's picture

OK, which one worked for Goldman? 

Desert Irish's picture

Wasn't Barings once the worlds oldest bank? Good to see all the important lessons were learnt after that fiasco /s

Uskatex's picture

Barings: the first merchant bank - founded 1762.

Monte dei Paschi di Siena: the oldest bank in the world still active - founded 1472

palmereldritch's picture

So they're the dudes holding the Deed to the Western Hemisphere...

GetZeeGold's picture



Didn't work for GS......but probably will be. Either that or the BIS.

Stuck on Zero's picture

We should feel sorry for this fellow who has probably become filthy rich while shafting the poor hardworking taxpayers.  However, he will always live with the stigma that he failed his bank. NOT!


El Oregonian's picture

More like Wrathchilds, were they leave nothing but wrath to whomever becomes involved with them.

jimijon's picture

Will a derivative domino cascade then start?

nonclaim's picture

No chance... Even China is bailing out domestic defaults to save face.

Our "global village" (anyone remember that line?) is one big house of cards still standing up... with super glue and duct tape.

CH1's picture

Will a derivative domino cascade then start?

Nah, time for another round of printing and zero percent Fed loans to fill the gaps.

But if that fails in any way.... the great unwinding shall keep us greatly entertained.

youngman's picture

In the real world it should...but in the world we live in now....NEVER will happen....the bankers will just call the printers and ask for what they need to cover the losses....all "off the books" of course.....if this was ever made public......things would be much different....

Manthong's picture

Like with Greece, they won’t let the game end and will keep dealing Aces from under the table..

 until China decides it’s time to up-end the card table..

or until nature decides it’s time for an unintended transitional event.

j0nx's picture

Off market? News to me. I wasn't aware that a legitimate market for them even existed. At least not a regulated legitimate market.

Cursive's picture

Any day that a bank dies is a good day.

WarHorse's picture

So many green arrows.  Really makes me wonder what people that post here do for a living. 

jimijon's picture

Probably not using usury (fraud) as their business model.

max2205's picture



Only down 5%  well played sir

Seasmoke's picture

I always acted according to the law.

LOL. I am sure you did. But that's the fucking problem !!!!!!

unrulian's picture

If someone was sharpening a blade in the woods, would any bankers hear it?

Seasmoke's picture

The Vatican cannot be pleased with this. Time again for them to steal a few more million American houses.

youngman's picture

Off the books.....that is the key words here....when you have to hide it....well....something must be wrong with it...but this is the new normal....

buzzsaw99's picture

It's all on the up and up though. :roll:

Ignorance is bliss's picture

I wonder how Italian savers are feeling right about now? could lead to a bank run across Italy as everyone starts to question the safety of their money.

buzzsaw99's picture

How about those who bought stock in the bank between 2008 and 2013? Do you think they feel defrauded a tad bit?

youngman's picture

And everyday with stories like this...you would think gold and silver would be the safe haven.....

holdbuysell's picture

'Losses' and 'derivatives' used in the same sentence about an overly connected hyper rehypothecated highly unstable banking system....

What could possibly go wrong?

williambanzai7's picture

LOL, fear not Mario, the dark clouds over Europe have dissipated.

HD's picture

If someone had told me five years ago I'd actually be rooting for the collapse of the current financial system I would have thought them insane...but here I am.

Waiting is the hardest part...



Cycle's picture

It has already collapsed, it's just that the Fed keeps pushing off the reckoning as banksters and pooobahs try to figure out how to raid the US Treasury for the next iteration.   I never thought it would last this long - sort of like watching Wile Cayote run and run and run and run off a cliff on air, defying even cartoon reality.

Downtoolong's picture

Doubling down Bankster Style.

Someone at Goldman must be getting fired today for missing out on this derivatives opportunity.


Cycle's picture

Goldman is already involved, albeit indirectly as Draghi vetted Massari.

EscapeKey's picture

Jail is only for people who do something illegal.

Hiding losses is not illegal provided it's done by someone politcally connected.

I do the same with my limited company, however, and I'm fresh out "Get out of Jail" cards.

GetZeeGold's picture



Here.....I'll loan you a couple - Jon Corzine

0z's picture

Who says jails are a good idea?

If I was a depositor, I would only ask for the assets of the bank to be liquidated in a bankruptcy.

Then, if it is impossible for me to recoup all of my money, the shareholders of the banks are responsible, with their personnal estate, for the money owed to senior creditors.

What I described is as old as written language. No one needs to go to jail.

Historically, if the debtors couldnt pay, they would be taken as slaves by the creditors, usually until the debt was deemed to be paid back.

news printer's picture

If any1 interested:  Secretary of State Hillary Clinton testifies on Benghazi attack


Rainman's picture

Billary has 2 choices : (a) perjure herself or (b) rat out Oblameo and his operatives as the source of the pre-election disinformation campaign on Benghazi.

The choice will be (a)

youngman's picture

She was a lawyer and a politician.......any question about her being able to lie

Bahamas's picture

MPS troubles started when they bought Banca Antonveneta for a price much higher than it's value . The strange thing is that MPS made this acquisition a few months after Banca Antonveneta had been previously bought by ABN AMRO.  

TrumpXVI's picture

Another tempest in a teapot.

As long as "Super Mario" Draghi has yer back, No Worries, Be happy!

Bahamas's picture

Some bloggers say that Mario Draghi will soon resign and will be handed the Presidency of Italy and that a German will take his place.

Headbanger's picture

Ciao baby to that idiot!