Introduction
An Italian judge has ordered four former executives of Monte dei Paschi di Siena (MPS) to stand trial for alleged false accounting related to the classification of impaired loans during 2015 and the first half of 2016.Context
The officials facing charges include former presidents Alessandro Profumo and Massimo Tononi, former CEO Fabrizio Viola, and ex-accounting manager Arturo Betunio. They are scheduled to appear in a Milan court on October 16. Their legal representatives have not commented on the case, but the accused have consistently denied any wrongdoing. MPS has stated that the trial's outcome will not affect the bank's operations, citing a series of favorable civil judgments in their NPL proceedings and a commitment to conservative accounting practices.Developments
This case is part of ongoing legal issues surrounding MPS, particularly in relation to the bank's 2017 bailout. Prosecutors allege that the bank engaged in false accounting from 2014 to 2017, which obscured its insolvency and would have hindered its state rescue. In a related decision, Milan judge Fiammetta Modica acquitted five other MPS executives, including former presidents Alessandro Falciai and Stefania Bariatti, alongside former CEO Marco Morelli, of all charges connected to that timeframe.The charges center around the misclassification of loans as "performing" instead of "impaired," a significant factor in the bank’s financial reporting. In 2017, Italy provided 5.4 billion euros in a precautionary recapitalization to MPS, necessitating compliance with EU regulations that ensure public funds are not used for losses in non-viable firms. The European Central Bank conducted a health assessment on MPS to facilitate state aid in alignment with EU competition laws.
Italy's Treasury handled the terms of the bailout in coordination with the European Commission, resulting in a commitment to reduce its ownership stake in MPS from 68% post-bailout. Under the leadership of CEO Luigi Lovaglio, MPS has undergone restructuring and has leveraged higher interest rates and lower costs to stabilize its operations. In late 2022, Lovaglio raised 2.5 billion euros to finance job redundancies.
In an additional legal outcome, Italy's Supreme Court confirmed an appeals court decision that exonerated all defendants from charges related to derivatives transactions believed to have concealed losses at MPS. Furthermore, MPS's former CEO and chairman were also cleared of similar charges after serving six years in prison, a verdict upheld by Italy's Supreme Court in February 2025.