NatWest, JB Drax in group that helped sell Cimolai derivatives

LONDON: NatWest Group Plc, Deutsche Bank AG, Morgan Stanley and JB Drax Honore are among the financial institutions that helped sell currency derivatives to Cimolai SpA, the Italian building firm now struggling with losses on some of the products, according to people familiar with the matter.

The quartet are part of the group of more than a dozen firms that arranged the sale of about US$400mil (RM1.8bil) of derivatives to Cimolai, some of which have soured as a result of the euro’s plunge against the dollar, the people said, asking not to be identified discussing a private matter.

It’s not clear which firms helped sell the derivatives that soured. Exposures also vary, with Deutsche Bank’s standing at less than €20mil (US$19mil or RM89.3mil), one of the people said.

The building firm, which has hired Lazard Ltd to help raise capital and restructure its finances, claims that its chairman and senior management had no knowledge of the contracts and may seek to challenge some of them, Bloomberg has reported.

Cimolai’s claims are the latest bout of trouble to hit the market for selling complex foreign-exchange derivatives to companies across southern Europe.

Multiple trades have blown up and prompted accusations that the clients weren’t aware of the risks involved.

In 2021, Europe’s largest wine exporter sued Goldman Sachs Group Inc over currency trades that the firm, J. Garcia Carrion SA, said cost it millions of euros.

It was part of a wider case involving allegations that its former finance director entered into unauthorised trades with a range of banks, including BNP Paribas SA and Deutsche Bank.

Deutsche Bank was also subject to a €500mil (RM2.28bil) mis-selling claim last year from Palladium Hotel Group.

The lender, which has denied any wrongdoing, previously launched a sweeping internal probe into whether some of its products were missold to clients.

Cimolai, founded in 1949 by labourer Armando Cimolai and controlled by his son Luigi, designs and builds steel structures for bridges, buildings, stadiums and even the new shelter for the Chernobyl nuclear reactor. — Bloomberg