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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Wed, 01/23/2013 - 09:41 | 3178533 fightthepower
fightthepower's picture

Fuck you Rothschilds, Fuck you Bernanke!

Wed, 01/23/2013 - 09:47 | 3178544 GetZeeGold
GetZeeGold's picture

 

 

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

Wed, 01/23/2013 - 09:55 | 3178564 Death and Gravity
Death and Gravity's picture

The dude has nice hair.

Wed, 01/23/2013 - 10:00 | 3178575 knukles
knukles's picture

OK, which one worked for Goldman? 

Wed, 01/23/2013 - 10:01 | 3178581 CH1
CH1's picture

All of them?

Wed, 01/23/2013 - 10:10 | 3178601 Desert Irish
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

Wed, 01/23/2013 - 12:04 | 3179094 Uskatex
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

Wed, 01/23/2013 - 13:19 | 3179507 palmereldritch
palmereldritch's picture

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

Wed, 01/23/2013 - 10:04 | 3178586 GetZeeGold
GetZeeGold's picture

 

 

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

Wed, 01/23/2013 - 11:04 | 3178800 Stuck on Zero
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!

 

Wed, 01/23/2013 - 11:06 | 3178809 El Oregonian
El Oregonian's picture

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

Wed, 01/23/2013 - 09:44 | 3178537 jimijon
jimijon's picture

Will a derivative domino cascade then start?

Wed, 01/23/2013 - 09:59 | 3178573 MFLTucson
MFLTucson's picture

Hopefully 

Wed, 01/23/2013 - 11:42 | 3178951 nonclaim
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.

Wed, 01/23/2013 - 09:59 | 3178574 CH1
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.

Wed, 01/23/2013 - 10:44 | 3178719 youngman
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....

Wed, 01/23/2013 - 10:48 | 3178733 Manthong
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.

Wed, 01/23/2013 - 09:46 | 3178546 j0nx
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.

Wed, 01/23/2013 - 09:59 | 3178570 Just Ice
Wed, 01/23/2013 - 09:49 | 3178551 Cursive
Cursive's picture

Any day that a bank dies is a good day.

Wed, 01/23/2013 - 11:50 | 3179000 WarHorse
WarHorse's picture

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

Wed, 01/23/2013 - 11:55 | 3179037 jimijon
jimijon's picture

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

Wed, 01/23/2013 - 09:52 | 3178559 max2205
max2205's picture

Shocked

 

Only down 5%  well played sir

Wed, 01/23/2013 - 11:13 | 3178560 SwampHonkey
SwampHonkey's picture

NICE

Wed, 01/23/2013 - 09:54 | 3178563 Seasmoke
Seasmoke's picture

I always acted according to the law.

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

Wed, 01/23/2013 - 09:57 | 3178565 unrulian
unrulian's picture

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

Wed, 01/23/2013 - 09:57 | 3178567 Seasmoke
Seasmoke's picture

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

Wed, 01/23/2013 - 09:57 | 3178568 youngman
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....

Wed, 01/23/2013 - 09:57 | 3178569 buzzsaw99
buzzsaw99's picture

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

Wed, 01/23/2013 - 09:59 | 3178571 Ignorance is bliss
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.

Wed, 01/23/2013 - 10:02 | 3178580 buzzsaw99
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?

Wed, 01/23/2013 - 10:46 | 3178726 youngman
youngman's picture

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

Wed, 01/23/2013 - 10:02 | 3178584 holdbuysell
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?

Wed, 01/23/2013 - 10:03 | 3178585 williambanzai7
williambanzai7's picture

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

Wed, 01/23/2013 - 10:06 | 3178587 HD
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...

http://www.youtube.com/watch?v=uMyCa35_mOg

 

Wed, 01/23/2013 - 10:49 | 3178743 Cycle
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.

Wed, 01/23/2013 - 10:06 | 3178591 Downtoolong
Downtoolong's picture

Doubling down Bankster Style.

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

 

Wed, 01/23/2013 - 10:27 | 3178662 Cycle
Cycle's picture

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

Wed, 01/23/2013 - 10:07 | 3178592 EscapeKey
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.

Wed, 01/23/2013 - 10:09 | 3178599 GetZeeGold
GetZeeGold's picture

 

 

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

Wed, 01/23/2013 - 10:21 | 3178638 0z
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.

Wed, 01/23/2013 - 10:09 | 3178596 news printer
news printer's picture

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

http://live.reuters.com/Event/Politics

Wed, 01/23/2013 - 10:14 | 3178612 GetZeeGold
GetZeeGold's picture

 

 

I hope she survives the trip.

http://www.youtube.com/watch?v=uHVEDq6RVXc

 

Wed, 01/23/2013 - 10:29 | 3178680 Rainman
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)

Wed, 01/23/2013 - 10:48 | 3178736 youngman
youngman's picture

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

Wed, 01/23/2013 - 10:10 | 3178600 Bahamas
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.  

Wed, 01/23/2013 - 10:11 | 3178604 TrumpXVI
TrumpXVI's picture

Another tempest in a teapot.

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

Wed, 01/23/2013 - 10:11 | 3178606 Bahamas
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.

Wed, 01/23/2013 - 10:12 | 3178607 Headbanger
Headbanger's picture

Ciao baby to that idiot!

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