Several high-profile banks, including Deutsche Bank and UBS, could be caught up in lawsuits over lending agreements with Italian local governments, reports the Daily Telegraph. According to some estimates, Italian authorities could be sitting on €35bn (£33bn) of liabilities relating to bonds they took out in the 1990s, which could turn into Italy’s biggest financial scandal since the Parmalat fraud. Milan has said it is considering legal action against a group of lenders – Deutsche Bank, JP Morgan Chase, UBS and Dublin-based Depfa, part of Germany’s Hypo Real Estate. The group struck a deal to help Milan manage repayments on €1.7bn of bonds it bought to finance public spending. Milan is losing money on the derivatives contract it took out with the banks. Italian police are also investigating the banks’ Milan offices.

This entry was posted by Gwen Robinson on Monday, January 5th, 2009 at 5:40 and is filed under Capital markets. Tagged with Depfa, deutsche bank, jpmorgan, ubs. Edit this entry.