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Monte dei Paschi to up provisions against legal risks after court ruling -paper

Credit: REUTERS/Alessandro Bianchi

Banca Monte dei Paschi di Siena plans to increase provisions against legal risks by more than 500 million euros ($589 million), newspaper La Repubblica reported, following the conviction of three former executives in a false accounting case.

MILAN, Oct 20 (Reuters) - Banca Monte dei Paschi di Siena BMPS.MI plans to increase provisions against legal risks by more than 500 million euros ($589 million), newspaper La Repubblica reported, following the conviction of three former executives in a false accounting case.

Monte dei Paschi's former chairman Alessandro Profumo, former CEO Fabrizio Viola and former supervisory board president Carlo Salvadori were convicted last week of not correctly booking two derivative transactions - known as Alexandria and Santorini - between 2012 and 2015.

Profumo, who currently serves as the CEO for state-controlled aerospace and defence group Leonardo LDOF.MI, and Viola were each handed a jail sentence of six years, while Salvadori received three and a half years.

They were also ordered to pay damages claimed by some of the bank's savers.

Two sources familiar with the matter told Reuters Monte dei Paschi was considering stepping up provisions against legal risks after the ruling.

One of the people said the matter could be discussed at a board meeting to be convened before the one scheduled for Nov. 5 to approve the bank's third-quarter results.

The bank could not be reached for immediate comment.

After years of mismanagement, Rome rescued Monte dei Paschi in 2017, spending 5.4 billion euros on a 68% stake which the European Union said must be sold by mid-2022.

Bankers have said any legal risks hanging over the lender could stand in the way of a potential sale.

($1 = 0.8493 euros)

(Reporting by Agnieszka Flak and Giuseppe Fonte)

((agnieszka.flak@thomsonreuters.com; +39 02 6612 9450; Reuters Messaging: agnieszka.flak.thomsonreuters.com@reuters.net))

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