* Ex-Monte Paschi chairman re-elected as bank lobby head
despite probe
* Enjoyed support of politicians, other bankers as trouble
brewed
* Forced to quit banking lobby over massive derivatives
losses
By Giselda Vagnoni
ROME, Feb 1 (Reuters) – Giuseppe Mussari, former chairman of
Monte dei Paschi, has few friends these days as a scandal swamps
the bank. But only a few months ago he was unanimously
re-elected as head of Italy’s main banking lobby despite
questions about his conduct.
In retrospect, Mussari’s reappointment in June 2012 at the
top of ABI, the association that represents the Italian banking
industry, appears increasingly strange given that he had left
Monte dei Paschi under a cloud a few months earlier.
A 50-year-old lawyer from Calabria with a passing
resemblance to the late screen legend Marcello Mastroianni,
Mussari had not sought a new term as Monte dei Paschi chairman
and left the bank on April 27, 2012.
Days after he left, prosecutors raided Rocca Salimbeni, the
14th century palazzo in Siena where the 540 year-old bank is
based, following suspicions it had misled regulators over its
acquisition of smaller rival Antonveneta in 2007-08.
A few months before, on Nov. 15, 2011, the Bank of Italy had
summoned Monte dei Paschi’s top management “in order to make
them face up to their responsibilities” over problems caused by
an opaque series of derivatives trades set up by the bank’s
finance division.
According to evidence given to the Italian parliament this
week, central bank regulators told bank management “to quickly
and definitively turn around the way it conducts its business”.
Shortly afterwards, managing director Antonio Vigni was
forced to resign, although he took a 4 million euro ($5.4
million) payoff to soften the blow which the Bank of Italy is
now contesting.
Italian prosecutors are investigating several former
managers of Monte dei Paschi over a string of allegations of
fraud and massive corruption in negotiating questionable and
loss-making transactions.
No details have been released of who is being investigated
and Mussari has made no comment on the allegations.
Badly weakened by its large government bond portfolio which
plummeted in value in the summer of 2011, Monte dei Paschi was
the only Italian bank to fail tougher new capital requirement
rules.
Despite this and the growing concern about the vulnerability
of Italy’s third largest bank, still struggling to absorb its
9-billion-euro cash acquisition of Antonveneta, there was little
sign of worry in the rest of the banking sector.
Federico Ghizzoni, chief executive of Unicredit, Italy’s
largest bank, backed Mussari as recently as Oct. 18 last year
when the scandal was already starting to run out of control.
“He has all our support, not just of Ghizzoni but ABI as a
whole,” Ghizzoni told reporters.
Just over two months later, the storm broke. Mussari
resigned from ABI last week after Monte dei Paschi finally
revealed that it faced potential losses of about 720 million
euros over some derivatives and structured finance operations.
PRESUMPTION OF INNOCENCE
Given the question marks over Mussari, why was he
reappointed as the main spokesman for the Italian banking sector
and what does this say about the appetite for transparency in
the close-knit world of Italian banking?
“There was the idea around at the time that the presumption
of innocence should also apply to bankers,” said one person who
was close to the situation at the time.
There was certainly little sign that regulators were worried
or that the Bank of Italy had expressed any informal concerns to
bank chiefs about Mussari. “I don’t recall any intervention with
any of the ABI re-appointments,” the association’s new President
Antonio Patuelli told Reuters in an interview.
Mussari himself appeared to have no doubts either and at
ABI’s general assembly in July, a few weeks after his
re-appointment, he delivered a reassuring message about the
banking sector’s ability to resist the economic crisis facing
Italy.
“In this context, Italian banks are an element of stability
for our country, thanks to their virtuous practices,” he said.
A former communist, with the reputation as an intelligent
and politically shrewed operator, Mussari’s excellent
connections in the Italian business establishment and
politicians on both the left and the right certainly helped.
Very close to Giulio Tremonti, the economy minister under
former prime minister Silvio Berlusconi, he also had strong
connections with politicians from the centre-left Democratic
Party including the former mayor of Siena, Pierluigi Piccini.
Powerful bankers such as former Unicredit chief executive
Alessandro Profumo, who succeeded him as Monte dei Paschi
chairman and who is now in charge of cleaning up the bank, were
also among his backers.
His own expertise in the technical aspects of banking was
less solid and he appears to have given the powerful head of the
bank’s finance division a free rein with the complex trades that
got the bank into trouble.
“They could do what they wanted because no one really
understood what they were doing, neither Mussari nor Vigni,” a
former mid-level official at Monte Paschi said.
A front-page cartoon in the daily Corriere della Sera on
Friday showed a man complaining over the breakfast table that he
can’t understand the arcane talk of swaps and derivatives that
pepper stories about the Monte dei Paschi scandal.
“They’ll make you president of ABI,” his mother responds.
