Nomura Sues Monte Paschi in London Court Over Derivatives Case

Nomura Holdings Inc. (8604) filed a claim in London against Banca Monte Paschi di Siena SpA the same day Italy’s third-biggest bank lodged a suit against it in an Italian court in a dispute about derivatives.

Nomura filed a claim March 1, a court filing shows, on the same day Monte Paschi made separate suits in Florence seeking damages over two derivative contracts dubbed Alexandria and Santorini, arranged respectively by Nomura and Deutsche Bank AG. (DBK)

Nomura is seeking a declaration from the British court that its derivatives contracts with Monte Paschi are valid, said a person with knowledge of the matter who asked not to be identified because the legal proceedings are under way. Rob Davies, a spokesman for Nomura in London, declined to comment.

The Italian lender is seeking 700 million euros ($910 million) in damages from Nomura and Paschi’s former managers, and 500 million euros from Deutsche Bank and former managers, Ansa newswire reported March 7, citing Chief Executive Officer Fabrizio Viola.

Monte Paschi, the world’s oldest bank, is being probed by regulators and prosecutors over allegations the lender used the two derivatives and a third one labeled Nota Italia to hide losses, adding to the cost of its rescue. In the case of the Santorini trade, never fully disclosed to investors, the bank made a money-losing bet on Italian government bonds, Bloomberg News reported on Jan. 17.

The lender has said Alexandria and Santorini masked earlier losses and the fair value of a third trade, Nota Italia, wasn’t reflected accurately during the life of the deal, erasing 730 million euros of assets in 2012.

Prosecutors are probing ex-executives for alleged market manipulation, false accounting and obstruction of regulatory activity during the 2007 takeover of Banca Antonveneta SpA as well as for fraud linked to derivatives, according to people with knowledge of the situation have said.

To contact the reporters on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net; Sonia Sirletti in Milan at ssirletti@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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