Monte Paschi Posts Third-Quarter Loss on Alexandria Settlement

  • Loss lower than the EU127m average loss estimated by analysts
  • Quarterly loss linked to closing of derivatives transaction

Banca Monte dei Paschi di Siena SpA, the world’s oldest bank, reported a third-quarter loss linked to the closing of a derivatives transaction known as Alexandria that was used to allegedly obscure losses at the Italian lender.

The net loss narrowed to 109 million euros ($117 million) from 797 million euros a year earlier, when the Siena, Italy-based lender emerged with the biggest capital shortfall in Europe’s stress tests. The results were affected by 88 million euros of one-time net costs related to the settlement of the Alexandria contract arranged with Nomura Holdings Inc.

The quarterly loss was lower than the 127 million-euro average loss estimate from eight analysts compiled by Bloomberg. The bank posted net income of 84.7 million euros for the first nine months.

Chief Executive Officer Fabrizio Viola is restoring profitability and bolstering the finances of Italy’s No. 3 bank by reducing risk and selling assets after tapping investors twice in less than two years. The bank had to restate its accounts in 2013 to reflect a loss that had allegedly been masked by the Nomura transaction and a similar deal with another lender.

Revenue fell 19 percent to 957.5 million euros as lower income from lending and the cost of the transaction with Nomura more than offset higher fees and commissions. Bad-loan provisions in the quarter fell to 430 million euros from 1.26 billion euros a year earlier.

Monte Paschi’s common equity Tier 1 ratio fully loaded, a measure of financial strength, rose to 11.7 percent as of Sept. 30 from 10.7 percent at the end of June. The settlement boosted the ratio by 70 basis points the bank has said.

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