An Italian judge has ruled that four international banks will face charges over their involvement in the 2003 bankruptcy of dairy firm Parmalat.
Citigroup, UBS, Deutsche Bank and Morgan Stanley are accused of not stepping in with measures that would have alleviated the company’s plight. The Italian firm collapsed under €14 billion ($18.6 billion) worth of debt, but was later restructured. All four of the banks deny any wrongdoing in the case.
Morgan Stanley said it would „vigorously contest these proceedings”. And Citigroup said that the trial would confirm it was „an injured party in the worst bankruptcy in Italy’s post-war history”. If found guilty, the banks may face bills of hundreds of millions of euros, and could, analysts say, be barred from operating in Italy.
Last year Parmalat launched a legal action against banks, claiming they had been aware that it was in a poor financial state, yet continuing earning money through commissions. Under Italian law, a firm can claw back money from banks which knew it was financially weak before going bankrupt.
For the past year a court in the city of Parma, home to Parmalat, has been hearing evidence against more than 60 former executives to decide if they should face charges. In a separate Milan trial, Parmalat’s founder Calisto Tanzi faces charges, along with 15 others, of false accounting and misleading the Italian stock market regulator in a trial that began in September 2005. (news.bbc.co.uk)