Scandal leaves Italian city bereft of ‘daddy’ bank

Monte dei Paschi- “Babbo Monte” — Daddy Monte — the city’s largest employer and greatest  patron is facing one of its toughest moments in its struggle for survival. 

From The International Herald Tribune:

Scandal leaves Italian city bereft of ‘daddy’ bank
BY JACK EWING AND GAIA PIANIGIANI

SIENA, ITALY — Cut into the stonework of the imposing Palazzo Salimbeni here is a name that has been entwined in the fortunes of this Tuscan city for five centuries: Monte dei Paschi, or Mount of Pastures.

Since the days of the Medici in Florence, to the north, the banking house of Monte dei Paschi has rained wealth on the people of Siena. For 541 years, it has endured war, plague and panic, and it stands today as the world’s oldest bank.

But beyond the arched entrance of the Salimbeni palace, inside the stately offices of Monte dei Paschi di Siena, a modern scandal has done what the centuries could not. The bank, founded in 1472, has been brought to its knees by 21st-century finance and subterfuge. To howls across Italy, the government has hastily arranged a €3.9 billion, or $5.1 billion, bailout. The widening scandal, which hit at a time of growing economic distress in Italy, has boiled over into an issue in nationwide elections to be held Sunday and Monday.

Nowhere is the shock greater than in Siena. For many here, Monte dei Paschi is more than a bank. It is ”Babbo Monte” — Daddy Monte — the city’s largest employer and greatest patron. For as long as anyone can remember, its money has helped pay for myriad charities and civic works, including Siena’s signature annual event, the colorful Palio horse races around the Piazza del Campo each summer. The bank’s largest shareholder, the charitable Monte dei Paschi Foundation, has long operated as a sort of shadow government here.

Read the wrest of the article here:  http://www.nytimes.com/2013/02/23/business/global/the-patron-of-siena-monte-dei-paschi-stumbles.html

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