Paschi, Nomura, Deutsche Bank Face Fines Over Derivatives Cases

(Bloomberg) -- Italy’s markets watchdog Consob imposed combined fines of 2.3 million euros ($2.7 million) against Banca Monte dei Paschi di Siena SpA, Deutsche Bank AG and and Nomura Holdings Inc. over two controversial transactions at the center of a trial in Milan.

Thirteen managers at the banks colluded to misrepresent Paschi’s accounts and give false information by using complex transactions dubbed Alexandria and Santorini, the regulator said Wednesday in a filing. The bankers must pay 1.6 million euros, while Siena-based Paschi was fined 700,000 euros. The three banks were ordered to pay the fines on behalf of their former employees if needed.

The three banks and 13 former employees are facing a trial in Milan for alleged false accounting and market manipulation in relation to these deals. The banks were accused of colluding to hide losses at the Italian lender by using the two trades that led to a misrepresentation of its finances between 2008 and 2012.

Deutsche Bank, based in Frankfurt, said it will challenge the fine. In a statement, the bank said that Consob’s decision has been appealed by the managers involved. A spokesman for Paschi declined to comment. A Nomura representative couldn’t immediately be reached.

A complex transaction Deutsche Bank helped put in place in 2008 hid more than 360 million euros of losses that Paschi was facing on a previous deal, prosecutors say.

Separately, Fabrizio Viola, Paschi’s former chief executive officer, and Alessandro Profumo, former chairman, are to face trial in Milan on charges of false accounting and market manipulation over how they booked deals that their predecessors had used to hide losses.

Read more: Paschi CEO says he was kept in dark on Santorini deal

To contact the reporters on this story: Chiara Albanese in Rome at calbanese10@bloomberg.net;Sonia Sirletti in Milan at ssirletti@bloomberg.net

To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net, Dan Reichl, Peter Eichenbaum

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