UPDATE 1-Italy's Piedmont Settles with Merrill Lynch over derivatives
MILAN, June 25 (Reuters) - Italian region Piedmont has reached a settlement with Merrill Lynch over two derivative contracts the U.S. bank sold it in 2006 to help cover bond issues worth about 1.8 billion euros ($2.4 billion).
The case is one of the biggest in a series of disputes between cash-strapped Italian local authorities and banks which stand accused of not being transparent in their dealings.
Last December an Italian court found Deutsche Bank , Depfa Bank, JP Morgan and UBS guilty of fraud for mis-selling derivatives to Milan.
"The parties ... have reached a completely satisfactory agreement which will avoid any long and costly legal proceedings," the Piedmont region and Merrill Lynch said in a joint statement on Tuesday.
No details were given on the settlement in question but a source close to the matter said a sum of about 20 million euros would have been a reasonable amount for Merrill Lynch to have paid Piedmont.
Piedmont had originally opened the dispute on the derivative sales with Intesa Sanpaolo and Dexia as well as Merrill, claiming it had been saddled with 54 million euros in commissions. The legal proceedings with Intesa Sanpaolo and Dexia are still ongoing.