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MPS CEO surprised at so much 'junk under the carpet'

Would not be 'tragic' if state became stakeholder

08 February, 19:56
MPS CEO surprised at so much 'junk under the carpet' (ANSA) - Bergamo, February 8 - Fabrizio Viola, the CEO of embattled Italian bank Banca Monte dei Paschi di Siena (MPS), said on Friday that he was surprised by the ''junk'' he had found since taking helm of the bank.

''I didn't expect so much junk under the carpet,'' Viola told Radio 24, ''But frankly, in view of recent events, I wouldn't have expected to find such a serious situation''.

MPS was thrown into crisis in January when it emerged that a shady series of derivative and structured finance deals produced losses of 720 million euros.

It has since emerged that Siena prosecutors are conducting a series of probes into alleged bribery, corruption, tax evasion and other illicit operations at MPS, which were either related to the bank's nine-billion-euro acquisition of rival Antonveneta in 2008 or the period following the takeover.

Before the scandal broke, the Italian government had approved a 3.9-billion-euro bailout loan to MPS, which may be converted into equity if the bank cannot make its payments to the State.

Italian Economy Minister Vittorio Grilli told the Italian parliament in late January that, given the share price at the time, Grilli estimated the Treasury could wind up with 82% of the bank's capital if it defaults. ''It wouldn't be tragic (if the Italian treasury became an MPS shareholder),'' Viola said. ''But we are working to avoid it.

''The final aim is to make the bank autonomous from a financial and economic perspective, over a time horizon that will certainly not be one year (but longer),'' he added. On Thursday, the bank's chief financial officer said it would pay back a government loan in 2016, one year later than previously scheduled.

Earlier Thursday, Viola had said there were no more high-risk derivatives on the bank's books and that ''there is no deposit flight'' from Italy's third-biggest lender.