Current and Former MPS, Deutsche Bank, Nomura Executives Charged in Italy -- Update

By Giovanni Legorano and Jenny Strasburg 

A judge in Milan on Saturday charged 13 former and current executives at Banca Monte dei Paschi di Siena SpA, Deutsche Bank AG and Nomura International PLC with a number of alleged financial crimes, people familiar with the matter said.

The decision by judge Livio Cristofano follows an investigation lasting more than 1 1/2 years by Milan prosecutors into two complex financial transactions that Monte dei Paschi arranged with Nomura and Deutsche Bank, as well as other transactions that allegedly helped Monte dei Paschi misrepresent its financial situation.

Monte de Paschi and Nomura spokespeople had no comment. A Deutsche Bank spokesman didn't immediately comment. Lawyers for the individuals either declined to comment or didn't respond to requests for comment.

In February, Milan prosecutors said that they were seeking the indictment of the executives after they had found evidence of the manipulation of Monte dei Paschi's stock and falsification of its accounting, and some of the executives' obstruction of the supervisory activity of Italian authorities, according to court documents seen by The Wall Street Journal.

In particular, in requesting the indictment of the managers, prosecutors alleged Monte dei Paschi's accounting was false between 2008 and 2012, with the bank's actual earnings being as much as 88% lower than what it disclosed during that time.

The bank--the world's oldest--has since been bailed out twice by the Italian government and has struggled to shore up its capital position and regain profitability. This summer, as the Tuscan lender emerged as the worst capitalized among large European lenders in a continentwide health check, it said it would have sold all its most toxic bad loans worth EUR28 billion ($31.5 billion) and raise up to EUR5 billion in fresh equity.

However, the bank's board recently ditched both its chairman and chief executive amid muted investor enthusiasm for the plan, which has been looking increasingly fragile, people familiar with the matter said.

The case is one of a raft of legal matters still hanging over Deutsche Bank from years past. Prolonged litigation and regulatory matters have cost the bank billions of dollars, adding to its woes as a new chief executive and lineup of senior executives try to cut expenses and boost profits.

On Saturday, Judge Cristofano sent to trial five former Monte dei Paschi managers, including ex-chairman Giuseppe Mussari and ex-general manager Antonio Vigni. The former executives couldn't be reached for comment, though in the past they have denied any wrongdoing. A lawyer for Mr. Vigni declined to comment. A lawyer for Mr. Mussari didn't immediately reply to a request for comment.

Former Deutsche Bank executives indicted Saturday include Michele Faissola, who formerly oversaw rates and commodity trading in Deutsche Bank's markets business and who was head of asset and wealth management last year when he left the bank. Mr. Faissola and a lawyer representing him declined to comment. Mr. Faissola has denied wrongdoing in the past.

In addition, the Milan judge charged Michele Foresti, a fixed-income trading executive who left Deutsche Bank in 2014, and Ivor Dunbar, a former global markets executive. Their lawyers declined to comment. Mr. Foresti and Mr. Dunbar couldn't immediately be reached for comment.

Matteo Vaghi, who also was indicted, remains at Deutsche Bank, working in wealth management. He declined to comment. Mr. Vaghi is a managing director who previously oversaw the wealth management unit's U.K. and Southern European operations.

Two other former Deutsche Bank managers and two former Nomura managers who were charged couldn't be reached.

Write to Giovanni Legorano at [e-mail] and Jenny Strasburg at [e-mail]

(END) Dow Jones Newswires

October 01, 2016 09:38 ET (13:38 GMT)

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