The news last month that Monte dei Paschi lost €730 million from dodgy financial products between 2007 and 2009 and, even worse, that the bank hid those losses were hidden from regulators, caught everyone off guard, including not only Italy’s politicians just weeks before its general election, but even Mario Draghi. Currently the head of the European Central Bank, Draghi served as the head of Italy’s central bank at the time Monte dei Paschi incurred the losses, an embarrassing oversight for the man whose ‘do-whatever-it-takes’ mantra has kept the eurozone’s sovereign debt crisis at bay since summer 2012.
Monte dei Paschi is Italy’s third-largest bank, which posted revenue of over €4 billion in 2010 before posting losses of €4.7 billion in 2011 and, as of last September, €1.7 billion in losses for 2012, a figure that’s sure to rise.
After its listing on the Italian stock exchange in 1999, it began an aggressive phase of expansion, acquiring several local banks as well as Banco Antonveneta from the Spanish bank, Banco Santander — the hidden derivatives that Monte dei Paschi entered into in order to finance those expansions are at the heart of the current scandal.
The crisis has helped no one in the Italian election — there’s enough blowback from the scandal to implicate not only Draghi’s bank regulators, but to have hurt leaders of Italy’s left, right and center at a time when disillusion among the Italian political elite is running as high as ever. Continue reading Monte dei Paschi scandal gives shares of blame to Italian left, right and center