Italy Court OKs State Loans to World's Oldest Bank
A court in Rome ruled on Thursday the Italian government's plan to lend 3.9 billion euros to troubled lender Banca Monte dei Paschi di Siena can go ahead, a source close to the matter told Reuters.
The administrative court rejected an attempt by the consumer rights' association Codacons to have the loans blocked, said the source. The ruling clears a hurdle to the financial help for the scandal-hit bank.
Codacons, which wants the world's oldest bank to be nationalized, is likely to appeal the decision to a higher tribunal, known as the State Council.
The Rome administrative court will make its decision public on Friday, said the source, who asked not to be named.
The Tuscan lender was forced to request state aid last year after failing to meet tougher capital requirements set by the European Banking Authority.
Under the bailout scheme, Monte dei Paschi is due to issue 3.9 billion euros ($5.16 billion) of bonds to the Italian treasury by March.
Italy's third largest lender said earlier this month that it faces losses of 730 million euros from opaque derivatives trades carried out in 2008-2009 which are at the center of a legal probe into alleged fraud and corruption.
The scandal has triggered a political storm ahead of an election on Feb. 24-25 because of the lender's close ties to the center-left Democratic party (PD).
A document filed to the court by Codacons has challenged the accounting of the trades and estimates a larger loss of between 1 billion and 1.5 billion euros.
The consumer body alleges that Italy's central bank failed in its oversight of the bank. Monte dei Paschi and the Bank of Italy, which has said Codacons' allegations are false, declined to comment on the consumer group's estimates of potential additional losses.
Among a spate of legal hearings on the case earlier on Thursday Italy's audit court also ruled that the state loans were legitimate.