Milanâs financial police seized 476 million euros ($620 million) of assets belonging to UBS AG, Deutsche Bank AG, JPMorgan Chase & Co. and Depfa Bank Plc as part of a probe into an alleged fraud. The police froze the banksâ stakes in Italian companies, real estate assets and accounts, the financial police said in a statement today. The assets seized yesterday also include those of an ex-municipality official and a consultant, the police said. The City of Milan is suing the four banks after it lost money on derivatives it bought from the lenders in 2005. The securities swapped a fixed rate of interest on 1.7 billion euros of bonds for a variable rate. The city said it was losing 298 million euros on the securities as of June. Milan is among about 600 Italian municipalities that took out 1,000 derivatives contracts worth 35.5 billion euros in all, the Treasury said. âMilan is an important case because it can be used as an example by others,â said Alfonso Scarano, who is heading a study into the trades by AIAF, a group representing Italian financial analysts. âThis is a unique time for borrowers to shed light on their potential losses and renegotiate contractsâ to take advantage of interest rates that have fallen to record lows. AIAF will next week testify before the Italian Senateâs inquiry into the citiesâ use of derivatives contracts. The banks reaped about 100 million euros in fees from the transactions, Milanâs financial police said today. The banks misled municipal officials on the advantages of buying the derivatives, including the impact of the fees they charged on the contracts, the financial police have said. German, U.S. Lawsuits Officials at all four banks declined to comment. A spokesman for the council declined to comment further today. Public officials had turned to financial instruments to reduce the cost of their debt and help fund their budgets. Local governments often entered into derivative contracts without soliciting bids from competing buyers. The Milan case is among lawsuits filed by local governments from Germany to the U.S. amid allegations of mis-selling and fraud. Italyâs Senate is leading a review of the use of derivatives among local administrations. The U.S. Justice Department has been investigating for more than two years whether banks and brokers conspired to overcharge local governments on similar swap agreements. Alabama challenged a so-called swaption deal last year as local governments across the U.S. faced rising bills after derivative trades with Wall Street banks backfired. http://www.bloomberg.com/apps/news?pid=20601087&sid=aisvHIHmcwQs&refer=home
Tried to short that s.o.b twice without success, terrible timing on my part. I'm thinking it will go like leh, aig. The market will be wrong until the very last second. Then it will gap down huge and die in one to two trading days. I'll short it at a buck if have to, just for revenge. Would love to see the real numbers on how much money has fled. What a terrible company. Freezing clients in junk, tax evasion, etc
+1 The only thing they have going for them is their Swiss ownership and the fact that they can do such creative bookeeping no one really knowns what the hell is even going on with their company.
Switzerland is going down big time Only thing left in Switzerland will be cheese and chocolate oh and the logo of UBS
Im no UBS fan, but for a country as corrupt as Italy to punish people because their trades suck is pretty weak. I wonder if they would have given UBS an extra 100MM if the trades had gone their way.. I think likely not...