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MPS exposure at Q1 to Nomura soared to 4.69 bn euros

Italian bank Monte Dei Paschi di Siena (MPS) said Tuesday its exposure toward Japanese bank Nomura soared to 4.69 million euros by the end of March, up 693 million euros since the end of 2014. The meteoric rise in liability, reported in the MPS interim report, was an effect of the derivatives deal dubbed Alexandria, and was directly due to increased risk associated with a Long Term Repo (LTR) operation worth 575 million euros and collateral paid of 146 million, the bank said. Former executives of MPS and Nomura bank entered into a contract in July 2009 involving the restructuring of the complicated financial instrument dubbed Alexandria. Investigations since then have focused on the role former bank executives may have played in hiding losses. The MPS interim report said the bank was addressing the European Central Bank’s (ECB) assessment, but until the ECB had completed its review, MPS was obliged to report its liabilities according to previous ECB guidelines. MPS was named last year by the ECB after a health check that showed a 2.1-billion-euro capital gap, which the Siena bank is now trying to fill. “If anyone needs to be concerned, it’s Normura,” MPS Chairman Alessandro Profumo said last month of worries surrounding its exposure. “Nomura must pay the damages”.

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