The Italian region of Piedmont must pay about 36 million euros ($47 million) to Dexia Crediop SpA and Intesa Sanpaolo SpA (ISP) after losing a London lawsuit over interest-rate swap contracts.
Judge Henry Eder said Piedmont hadn’t responded in time to defend the Italian banks’ application for payment, and called the region’s allegations of mis-selling “vague and obscure.” Piedmont hasn’t made payments since January 2012.
Italian local governments from Pisa to Sicily lost money on derivatives sold by investment banks that were supposed to limit interest-rate exposure on loans. In one of more than half a dozen British and Italian legal cases linked to the deals, a Milan judge convicted bankers and firms including Deutsche Bank AG, JPMorgan Chase & Co. (JPM:US) and UBS AG (UBSN) of fraud in December.
“If Piedmont wished to challenge those figures, they have had ample -- indeed more than ample -- time to do so,” Eder said in a written decision today.
A spokeswoman for Dexia Crediop in Rome declined to comment, while an Intesa spokeswoman didn’t have an immediate comment. Piedmont’s U.K. lawyer Andrew Wass declined to immediately comment.
Piedmont, which told the London court its finance director didn’t speak English well enough to understand the contracts, signed the swaps along with a 1.8 billion-euro bond issue in 2006. It sought a full trial to argue its case that the agreements weren’t valid under Italian law and contained hidden profits for the banks.
The judge rejected Piedmont’s argument that it wasn’t experienced enough in financial markets to enter into a derivative contract.
“It is, after all, a major regional authority and certainly had access to lawyers,” Eder said in the ruling.
Intesa and Dexia paid for the local authority’s officials to stay at luxury hotels and dine at Hotel Crillon in Paris and the two-Michelin star Sea Grill in Brussels in order to secure the contract, Piedmont told the court in a July 5 hearing.
The region settled a swap dispute with Bank of America Corp. (BAC:US)’s Merrill Lynch last month on confidential terms.
The case is: Dexia Crediop S.p.A. v. Regione Piemonte, High Court of Justice, Queen’s Bench Division Commercial Court
To contact the reporter on this story: Kit Chellel in London at firstname.lastname@example.org
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