The world's oldest bank survived five centuries only to nearly collapse from hidden derivatives.
In short: Founded in 1472, Banca Monte dei Paschi di Siena is the oldest continuously operating bank on Earth. Yet, this historic institution nearly vanished in the 21st century. A series of complex, concealed financial maneuvers led to a massive scandal, government bailouts, and a dramatic legal saga that shook European banking.
Tracing its origins to a 1472 mount of piety in Siena, the bank was established to support local agriculture and pastoralism. By 1624, it had formalized its structure, backed by the income of state-owned pastures in Maremma. For centuries, it served as a pillar of Italian finance, eventually expanding across the peninsula and becoming a publicly traded company in 1999. However, its modern era was defined by aggressive expansion and, ultimately, a catastrophic attempt to mask mounting losses.
The crisis began with the Santorini and Alexandria operations, derivative contracts initiated in 2002 and 2006 to finance the bank's rapid growth. By 2009, these deals were generating massive losses. To keep these figures off the balance sheet, management hid the documentation from auditors and the Bank of Italy. When the truth emerged in early 2013, the bank's shares plummeted, leading to a €3.9 billion state bailout. The fallout was immense: 13 former executives were initially sentenced to prison in 2019 for conspiring to hide €2 billion in losses, though these convictions were later overturned by Italy's Supreme Court of Cassation in 2023.
The bank's survival has been a precarious affair. It faced repeated capital crises, including a failed stress test in 2014 and a second government bailout in 2017. Despite these struggles, it remains a significant institution under the direct supervision of the European Central Bank. Today, the bank stands as a testament to the volatility of modern finance, having evolved from a charitable foundation into a complex, state-supported entity that continues to operate as the third-largest bank in Italy following its 2025 acquisition of Mediobanca.
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Sources
- Summary by Intellect · source: Banca Monte dei Paschi di Siena
- Also: Wikidata — Banca Monte dei paschi di Siena, Firenze (FI) · CC0
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