Post by Marlene Duvoix on Oct 24, 2010 6:57:48 GMT 4
* UniCredit ordered to pay 651,632.43 euros plus interest
* Case stems from 3 contracts signed in 2001-2003
* Court ruled on "merely formal aspect" of case-source
By Ian Simpson
MILAN, Oct 22 (Reuters) - An Italian court has cancelled interest rate swaps between UniCredit SpA (CRDI.MI) and the city of Rimini in the first ruling backing a local government in a derivatives case, Rimini municipal government said on Friday.
UniCredit, Italy's biggest bank, has been ordered to pay back Rimini 651,632.43 euros ($906,600), the amount the city had lost on three rate swap contracts, plus interest, the city said in a statement on its website.
Rimini, about 240 km (150 miles) north of Rome, was among hundreds of Italian cities that has faced losses from derivatives deals. The contracts involve switching fixed rates on loans to variable ones with banks.
Numerous local governments have taken banks to court. The Rimini case stemmed from contracts the city signed between 2001 and 2003.
Rimini court ruling, made on Oct. 12, is "the first judicial precedent favouring a local entity in this type of case", the city said.
A source close to UniCredit said the court had not accepted city officials' contentions of irregularities in the contracts.
The ruling was on a "merely formal aspect" and the compensation was well below that sought by Rimini, the source said.
Economists last year estimated that Italy's cities and regional bodies had an exposure to derivatives of about 40 billion euros, with losses of more than 6 billion euros.
The Economy Ministry banned new contracts in 2008 pending new rules.
In Italy's most high-level derivatives case, UBS AG (UBSN.VX), Deutsche Bank (DBKGn.DE), Germany's Depfa and JPMorgan Chase & Co (JPM.N) face aggravated fraud charges over an interest rate swap on a 1.68 billion euro bond issued by Milan, the biggest issued by an Italian city. (Reporting by Ian Simpson; Editing by Karen Foster) ($1=.7187 Euro)
* Case stems from 3 contracts signed in 2001-2003
* Court ruled on "merely formal aspect" of case-source
By Ian Simpson
MILAN, Oct 22 (Reuters) - An Italian court has cancelled interest rate swaps between UniCredit SpA (CRDI.MI) and the city of Rimini in the first ruling backing a local government in a derivatives case, Rimini municipal government said on Friday.
UniCredit, Italy's biggest bank, has been ordered to pay back Rimini 651,632.43 euros ($906,600), the amount the city had lost on three rate swap contracts, plus interest, the city said in a statement on its website.
Rimini, about 240 km (150 miles) north of Rome, was among hundreds of Italian cities that has faced losses from derivatives deals. The contracts involve switching fixed rates on loans to variable ones with banks.
Numerous local governments have taken banks to court. The Rimini case stemmed from contracts the city signed between 2001 and 2003.
Rimini court ruling, made on Oct. 12, is "the first judicial precedent favouring a local entity in this type of case", the city said.
A source close to UniCredit said the court had not accepted city officials' contentions of irregularities in the contracts.
The ruling was on a "merely formal aspect" and the compensation was well below that sought by Rimini, the source said.
Economists last year estimated that Italy's cities and regional bodies had an exposure to derivatives of about 40 billion euros, with losses of more than 6 billion euros.
The Economy Ministry banned new contracts in 2008 pending new rules.
In Italy's most high-level derivatives case, UBS AG (UBSN.VX), Deutsche Bank (DBKGn.DE), Germany's Depfa and JPMorgan Chase & Co (JPM.N) face aggravated fraud charges over an interest rate swap on a 1.68 billion euro bond issued by Milan, the biggest issued by an Italian city. (Reporting by Ian Simpson; Editing by Karen Foster) ($1=.7187 Euro)