Published by Global Banking and Finance Review
Posted on June 6, 2025
MILAN (Reuters) -An Italian judge has ordered four former executives of bank Monte dei Paschi di Siena to stand trial for alleged false accounting in 2015 and the first half of 2016 over the classification of impaired loans, judicial and legal sources said on Friday.
Former presidents Alessandro Profumo and Massimo Tononi, former CEO Fabrizio Viola, and ex-accounting manager Arturo Betunio are set to face charges of false accounting and market manipulation at a Milan court on Oct. 16.
Lawyers for the four did not immediately respond to requests for comment, but all have consistently denied wrongdoing.
The case marks the latest development in a series of legal proceedings linked to the troubled Tuscan lender’s 2017 rescue.
Milan prosecutors have alleged that false accounting from 2014 to 2017 was used to obscure the bank's insolvency, which would have blocked its state bailout, according to judicial documents.
Milan judge Fiammetta Modica on Friday cleared five other MPS executives, including former presidents Alessandro Falciai and Stefania Bariatti, and former CEO Marco Morelli, of all charges related to the other years under investigations.
Prosecutors had previously requested no proceedings for these periods.
The alleged offence relates to the misclassification of loans as "performing" rather than "impaired".
Italy pumped 5.4 billion euros ($6.15 billion) into MPS in 2017 under a so-called precautionary recapitalisation. Under European Union rules, this applies only to viable companies, so that public money is not used to cover any actual or expected losses.
The European Central Bank conducted a health check on MPS at the time to unlock state aid in compliance with EU competition rules.
Italy's Treasury negotiated the bailout terms with the European Commission and eventually committed to reducing its stake in the bank, which after the bailout stood at 68%.
Under CEO Luigi Lovaglio, the bank has restructured, benefiting from higher interest rates and lower costs. Lovaglio raised 2.5 billion euros in late 2022 to fund redundancies.
In October 2023 Italy's Supreme Court confirmed an appeals court's ruling that overturned a previous verdict and acquitted all defendants of charges related to derivatives deals that prosecutors alleged had helped MPS hide losses.
In December 2023, MPS's former CEO and chairman were also acquitted on appeal, after serving six years in prison in a related case. The verdict was upheld by Italy's Supreme Court in February 2025.
($1 = 0.8776 euros)
(Reporting by Emilio Parodi, editing by Giselda Vagnoni and Louise Heavens)
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