Monte dei Paschi hid €2 billion in derivatives losses — the oldest bank needed a bailout

Monte dei Paschi di Siena was founded in 1472, making it the oldest bank in the world still operating. In the 2000s, the bank's management pursued an aggressive expansion strategy financed by complex derivative transactions. Two operations in particular — named 'Santorini' in 2002 and 'Alexandria' in 2006 — were structured as hidden derivatives that the bank never disclosed to its own auditors or to Italy's central bank.

By 2009, those operations were generating huge losses. Rather than acknowledging them, top management led by bank president Giuseppe Mussari entered into even more complex derivative contracts with Deutsche Bank and Nomura to conceal the damage. The hidden losses grew to an estimated €500–750 million from the original operations, and a court later found that the bank had hidden a total of €2 billion in losses between 2008 and 2012. The documentation was never shared with the bank's auditors, shareholders, or the Banca d'Italia.

The scandal erupted in November 2012 when the bank's new board discovered the secret contracts and forwarded them to regulators. The revelation wiped more than 20% off the bank's share price in three days. On 26 January 2013, the Banca d'Italia approved a €3.9 billion bailout. In 2019, 13 former executives were convicted and sentenced to prison — including the ex-chairman and CEO who each received 7 years — while Deutsche Bank and Nomura were fined €160 million. Those convictions were overturned on appeal in 2022 and confirmed by Italy's highest court in 2023.