Italy’s central bank knew Banca Monte dei Paschi di Siena SpA papered over a loss of almost half a billion dollars two years before prosecutors were alerted to the complex transactions, documents revealed in a Milan court show.
A 2010 report from the Bank of Italy, headed at the time by Mario Draghi, now president of the European Central Bank, shows inspectors were aware that a 2008 trade struck with Deutsche Bank AG was the mirror image of an earlier deal Monte Paschi had with the German lender. The Italian bank was losing about 370 million euros ($431 million) on the earlier transaction, dubbed Santorini, as of December 2008. The new trade posted a gain of roughly the same amount and allowed losses to be spread out over a longer period, the document shows.
