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World's oldest bank suspended from share trading in fallout from derivatives purchase

By: The Associated Press

Posted: 01/23/2013 4:27 AM | Comments: 0 | Last Modified: 01/23/2013 8:07 AM

Banca Monte dei Paschi di Siena headquarter's main entrance in Milan is shown in a handout photo. The bank was established in 1472. THE CANADIAN PRESS/HO, BMPS

MILAN - Shares in the world's oldest running bank, Monte dei Paschi di Siena, have been suspended from trading after reports claimed that its profits will be hurt by financial derivatives it has bought.

The bank has come under market scrutiny after the daily Il Fatto Quotidiano reported that a purchase of derivatives three years ago threatens to cut 2012 earnings by at least €200 million ($293 million). The bank's former chairman, who reportedly approved the purchase, has resigned this week from the Italian banking association as a result.

Monte dei Paschi was suspended Wednesday from trading on the Milan Stock Exchange after dropping 8 per cent to €0.25.

The bank's board is to vote on Friday on capital increases that are key to clinching a government aid package of€3.9 billion.

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