IMF says Bank of Italy was vigilant on Monte Paschi

Reuters News
Posted: Feb 05, 2013 11:28 AM
IMF says Bank of Italy was vigilant on Monte Paschi

By Giselda Vagnoni

ROME (Reuters) - The International Monetary Fund said on Tuesday that Italy's central bank did a good job in its oversight of crisis-hit Monte dei Paschi di Siena, in a boost for ECB chief Mario Draghi, who led the Bank of Italy as Monte Paschi ran into trouble.

An IMF team was in Italy until last week to conduct the first part of an assessment of Italy's financial system and Reuters has been told that Monte Paschi was among the issues it discussed with the BoI.

"The IMF team's preliminary view is that the Bank of Italy (BoI) took timely and appropriate action - within the limits of the legal framework - to address problems at MPS," the IMF's chief spokesman Gerry Rice told Reuters.

"Oversight was close and supervisory action escalated appropriately as MPS's problems became acute," Rice said in a written statement.

The central bank has been widely criticized over its oversight of Monte Paschi <BMPS.MI>, which is set to tap 3.9 billion euros of state loans and whose former management is under investigation for fraud and other financial crimes.

The IMF's backing will be particularly welcomed by Draghi, who was BoI governor between 2006 and 2011 when the opaque derivatives trades Monte Paschi officials allegedly set up to massage its accounts were conducted and came to light.

He has not yet commented on the case, but can expect to be questioned on it by reporters at the ECB's monthly news conference on Thursday.

(Writing by Gavin Jones; Editing by Angus MacSwan)