Post date: Jan 25, 2013 7:50:42 PM
Reuters Business Video Report - There were angry scenes in Siena as shareholders arrived for an assembly at the world's oldest bank.
Italy's Monti dei Paschi was already seeking a 3.9bln euro bailout.
But this week the Tuscan lender revealed a derivatives scandal could cost it a further 720 million euros.With elections just weeks away the case has become a political issue in Italy.
The bank has links to the centre-left Democratic Party which is leading in the polls.
Comedian-turned-politician Beppe Grillo is head of the anti-establishment 5-Star movement.
POLITICIAN AND COMEDIAN, BEPPE GRILLO,
"This mess is getting bigger and it will hit rock bottom. This is a sign of what is happening, the Democratic Party has become a bank and the bank has turned into theDemocratic Party. Monte dei Paschi needs to become bank and not a company, it should be a public service as it was before when it was worth 20 billion, now it's worth two billion."
The bank's Chairman Alessandro Profumo said the impact of the derivatives trades was still being evaluated.
But top management are facing heavy criticism from shareholders.
Pierluigi Piccini is an executive at the bank's Paris division.
MONTE DEI PASCHI DI SIENA PARIS EXECUTIVE AND FORMER SIENA MAYOR, PIERLUIGI PICCINI,
"We need a real clean-up from the past. It's not possible the top management did not know about this. It's unreal."
Latest opinion polls suggest the centre-left is still favourite to win the election.
But its majority may be eroded, says Professor Giovanni Orsina.
DEPUTY DIRECTOR LUISS SCHOOL OF GOVERNMENT, PROFESSOR GIOVANNI ORSINA,
"First it shows that this is a major problem for Italy as a system, second certainly this is an issue for the election campaign because of course all those who do not like theDemocratic Party are demonstrating that it's not as clean as it pretends to be and given that cleanliness is a major campaign issue, I expect this to be used very heavily."
The Prime Minister has now called for an investigation and the bank is facing the prospect of nationalisation.
The reputational damage to such an historic lender could make the final cost even greater.