The probe into Banca Monte dei Paschi di Siena SpA widened as Italian prosecutors opened an investigation into allegations of insider trading in the Italian lender's shares and carried out raids in three cities.
The move marks a broadening of the inquiry into how the world’s oldest lender hid losses before seeking a government rescue bailout. Former Monte Paschi managers are already being probed over allegations of obstructing regulators, market manipulation and false accounting related to the acquisition of Banca Antonveneta SpA, people with knowledge of the situation said last month, asking not to be identified.
Addresses in Turin, Milan and Lecce linked to two current board members were today searched by the finance police, according to a statement from the Siena prosecutor. The board members themselves aren’t under scrutiny. The finance police also seized a further 6 million euros ($7.8 million) of assets from former managers as part of their continuing fraud probe. A spokeswoman for the Siena, Italy-based bank declined to comment.
Monte Paschi has dropped 31 percent in Milan trading since Jan. 17, when Bloomberg reported the lender engaged in a derivative with Deutsche Bank AG in 2008, dubbed “Project Santorini,” that obscured losses before it sought a government bailout the following year.
The shares gained as much as 2.5 percent and were 1.8 percent higher at 20.3 euro cents as of 11:34 a.m. in Milan trading today.
Chief Executive Officer Fabrizio Viola and Chairman Alessandro Profumo, appointed last year to turn around the company, last week received an additional 4.1 billion euros in a taxpayer bailout after failing to meet regulators’ minimum capital requirements.
The lender said on Feb. 6 it will take a 730 million-euro hit to assets after reviewing structured deals from 2008 and 2009 that hid losses on earlier derivatives.