Poste Italiane to sue JP Morgan Chase
Two months after Risk broke the story of Poste Italiane’s derivatives losses as a result of exotic transactions with JP Morgan Chase and other banks, the large Italian state-owned post and financial services company is suing the US bank for €40 million.
Since Risk’s story was published, it has emerged that Catasta exceeded his mandate to hedge against currency and interest rate fluctuations for Poste using contracts with notionals not exceeding €50m. He has now been dismissed.
In its writ, Poste Italiane alleges that JP Morgan Chase was at fault by not checking Catasta’s authority before signing contracts with him for barrier quanto swap transactions linked to US interest rates. Not only were these transactions much bigger than Catasta’s notional limit, but they appear to have been highly speculative in nature. The lawsuit is likely to embarrass the US bank since it has recently been engaged by the Italian Treasury to advise on the reform of Cassa Depositi e Prestiti, the Rome-based public financing body that has a 35% ownership stake in Poste Italiane.
A JP Morgan Chase spokesman confirmed that the bank had received a writ from Poste Italiane, but was unable to comment as the document was still under review. Poste Italiane also declined to comment.
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