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Rome court summons Bank of Italy over Monte Paschi

Monte Dei Paschi bank headquarters is pictured in Siena January 25, 2013. REUTERS/Stefano Rellandini
Monte Dei Paschi bank headquarters is pictured in Siena January 25, 2013. REUTERS/Stefano Rellandini

By Antonella Cinelli

ROME (Reuters) - A court in Rome has summoned Bank of Italy officials for questioning on the state bailout of Monte dei Paschi, as scandal spread over the trading that plunged the world's oldest bank into trouble.

The Lazio regional administrative court said in a statement on Wednesday that it had called Deputy Governor Fabrizio Saccomanni and Luigi Federico Signorini, the official in charge of bank supervision, to a hearing on Saturday. The central bank said they would not attend, but would be represented by counsel.

The Bank of Italy, headed at the time by Mario Draghi who has gone on to head the European Central Bank, faces criticism of its supervision of the 540-year-old institution from Siena and of its role in approving a government bailout last week.

The summons to the central bankers follows a request to the court by consumer lobby Codacons to block the 3.9-billion euro ($5.3 billion) state loan approved by the Bank on Saturday.

Monte dei Paschi was left facing losses of 720 million euros ($977 million) on a series of derivative and structured finance transactions. Already badly weakened by paying 9 billion euros cash for rival Antonveneta just before the 2008 global crash, the trades appear to have been made to hide losses on that deal.

Regulators including the Bank of Italy have faced mounting pressure over their failure to head off the problems, despite repeated warnings dating back to at least 2009 that Monte dei Paschi's financial position risked sliding out of control.

Less than a month before a national parliamentary election on February 24-25, the case has also raised questions over the close links between Monte dei Paschi and local Tuscan politicians who dominate the shareholder foundation which controls the bank.

On Thursday, Bank of Italy deputy managing director Fabio Panetta defended the central bank's handling of the case, saying: "Our oversight has been continuous and impeccable."

EUROPEAN DEFENCE

European Bank Authority chief Andrea Enria defended the Italian central bank and said the case should not raise doubts about the solidity of the Italian banking system as a whole, pointing to other scandals, including Spain's Bankia, Franco-Belgian Dexia and Britain's Royal Bank of Scotland.

"As it was for Bankia, Dexia and the Royal Bank of Scotland, when you have a case of misbehavior the responsibility lies principally with the management that did it," Enria, who worked at the Bank of Italy in the 1990s, told reporters in Milan.

However, the affair has raised speculation over the role of ECB President Draghi, who was governor of the Bank of Italy at the time of the Antonveneta deal and in the years when the derivatives trades were set up by Monte dei Paschi.

Separately, prosecutors in Siena, the bank's home since it was founded in 1472, are investigating allegations that massive bribes were paid to smooth the Antonveneta deal as well as possible accounting malpractice over the derivatives trades.

They have revealed little about the substance of the investigation beyond saying it is focused on former managers as well as the bank itself as an institution.

On Thursday, they interviewed Ettore Gotti Tedeschi, head of the Italian branch of Banco Santander, the former owner of Antonveneta, and Gabriello Mancini, chairman of Monte dei Paschi's main shareholder foundation.

Monte dei Paschi cleared out its old management last year, when Antonio Vigni quit as managing director and Giuseppe Mussari stepped down as chairman. Mussari resigned as head of the ABI Italian Banking Association last week.

(Additional reporting by Silvia Ognibene in Siena and Francesca Landini in Milan; Writing By James Mackenzie; Editing by Alastair Macdonald)

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