MILAN, ITALY – Prosecutors in Italy are seeking to seize €1.8 billion ($2.4 billion) in assets from Nomura Holdings Inc. as part of an investigation into Banca Monte dei Paschi di Siena SpA’s use of derivatives to hide losses.
Sadeq Sayeed, Nomura’s former European head, and Raffaele Ricci, a managing director in fixed-income sales, are also being probed for allegedly colluding to obstruct regulators and making false statements, prosecutors in Siena, where the bank is based, said Tuesday.
They are also sequestering €14.4 million in assets from three former Monte Paschi managers already under investigation, including Chairman Giuseppe Mussari, General Manager Antonio Vigni and finance chief Gianluca Baldassarri.
The seizures are linked to allegations of fraud and usury, the prosecutors said.
Monte Paschi has claimed Nomura colluded with its former managers to devise one of two derivatives in 2008 and 2009 that hid total losses of much as €557 million. Nomura reaped at least €88 million from the transaction, dubbed Alexandria, according to the Italian lender.
“The amount in question is unprecedented,” said Andrea Castaldo, a criminal lawyer and professor at the University of Salerno, Italy, who isn’t involved in the case. “The allegation of usury raises concern as to why it wasn’t spotted by regulators before.”
Monte Paschi sought a €4.1 billion bailout in February, its second in four years, as its capital shortfall widened.
The prosecutor’s order to seize assets must be ratified by a judge in Siena within 10 days, a police official said.
Nomura, which isn’t under probe itself, said Tuesday that the bank will “vigorously” contest any suggestion of wrongdoing in the case. Sayeed, 59, said he denied any allegation of wrongdoing against him. Ricci didn’t return a call and an email seeking comment. Deutsche Bank said Monte Paschi’s claims were “entirely without merit” and that the lender would defend itself vigorously.
As part of the deal with Nomura, Monte Paschi bought Italian government bonds using a loan from the brokerage.