Banks 'launch appeal' against Italian asset seizure

8 May 2009

A quartet of international banks have launched a joint appeal against the seizure of assets worth €476 million ($637 million) by authorities investigating a suspected fraud linked to a bond issue by the city of Milan, according to reports.

JPMorgan Chase, UBS, Deutsche Bank and Depfa Bank had real estate, bank accounts, securities and other assets seized on April 28th. Italian authorities intend to use the assets for restitution should any bankers be convicted in connection with the alleged fraud.

According to sources quoted in the Wall Street Journal, the institutions have jointly appealed to a judge in Milan to unfreeze equities and real estate assets.

Italian investigators have accused bankers of failing to properly inform city officials of the risk involved in derivative contracts sold as part of the bond issue. They are also alleged to have told Milan officials that the deal would save the city authority money.

However, estimated losses currently stand at around €300 million, although the full extent of the damage will not be known until the loan is repaid in 2035.

The banks are alleged to have earned €100 million in "illicit profits" from the deal, the WSJ noted.

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