Everywhere in the world where you have unions involved with politics you have dodgy financing scandals. Only the wops would let a commie run a bank.
Italian magistrates investigating losses at Banca Monte dei Paschi say the mushrooming scandal has taken a dramatic turn, with political fallout that threatens to rock the country‚Äôs elections next month and upset eurozone plans for a banking union.
‚ÄúThe situation is explosive,‚ÄĚ said Tito Salerno, head of the prosecuting team in Siena, describing the fast-moving events at Italy‚Äôs third-largest bank as extremely grave.
The Milan bourse tumbled 3.4pc and yields on 10-year Italian bonds spiked 15 basis points to 4.31pc as the political scandal widened.
Monte dei Paschi (MPS), the world‚Äôs oldest bank dating back to 1472, is under investigation for covering up losses on derivatives and paying over the odds for its ‚ā¨9bn (¬£7.8bn) purchase of Banca AntonVeneta in 2007. Italy‚Äôs press alleges that the inquiry has unearthed a network of bribes and kickbacks, a claim denied by the bank.¬†
The lender has lost ‚ā¨6.4bn since early 2011 and the damage is mounting. Italy‚Äôs weekly news magazine Panorama reports MPS could face another ‚ā¨500m losses from its ‚ÄúChianti Classico‚ÄĚ venture into property loans, a claim also denied.
MPS has had to be rescued a third time, issuing a ‚ā¨4.5bn convertible bond at a 9pc interest rate. The stock price has crashed 95pc.
What makes the case so delicate are the bank‚Äôs close ties to the Italian political Left. Right-wing critics claim it was a patronage machine for the Democratic Party (PD) of Luigi Bersani, current front-runner in Italy‚Äôs close-fought elections.
MPS is 35pc-owned by a foundation that answers to the PD-controlled Tuscan province of Siena and was run by ex-Communist Giuseppe Mussari until his abrupt exit this month.