Parmalat sues Deutsche Bank and UBS

MILAN - Parmalat has sued Deutsche Bank and Swiss bank UBS to recover damages worth 2.2 billion euros ($3.91 billion), broadening the Italian dairy group's battle against partners it says helped drive it into insolvency.

The suit, filed in the northern Italian city of Parma, is the second damages claim by bankrupt Parmalat's administrators in Italy, adding to multi-billion dollar US damages claims.

Parmalat has argued the group's former bankers, including Deutsche Bank and UBS, worked with its previous management to deceive investors. The banks deny wrongdoing.

Wednesday's claim also follows a request last month by investigating magistrates that four global banks be indicted for their role in the 2003 collapse, including Deutsche Bank and UBS, along with Citigroup and Morgan Stanley.

Deutsche Bank, Germany's biggest bank, and UBS, Europe's biggest bank by assets, together underwrote 770 million euros in Parmalat bonds.

UBS said in a statement it believed its transactions with Parmalat were valid, adding it would mount a "vigorous defence." UBS worked with Parmalat from 1996, including on bonds issued in early 2003, the year of its collapse.

Deutsche Bank, which advised Parmalat on the sale of its US businesses, said in a separate note it considered the claim to be unfounded and would defend its position.

Deutsche Bank's managing director of corporate finance from March 2003 was a former Parmalat employee, Massimo Armanini. He has been named by Milan magistrates in their probe.

Parmalat's administrators are accelerating efforts to reclaim damages ahead of the group's return to the stock market, due in October, after creditors this month approve a swap turning 12 billion euros of debt into shares.

One bondholder said potential revenue from the claims could double Parmalat's value on the bourse.

Earlier this month, Parmalat sued US bank JP Morgan and Italy's UniCredito for 4.4 billion euros in its first Italian damages suit.

Parmalat's administrators have already filed three US lawsuits to recover US$10 billion ($14.50 billion) in damages from the group's auditors and Citigroup and Bank of America.

They have also filed over 50 suits in Italy against dozens of Italian and foreign banks -- including Deutsche Bank and UBS -- to recover 7 billion euros paid to them by Parmalat's former management for deals carried out just before its collapse.

Under Italian law, administrators can seek to reclaim money paid to financial institutions in the run-up to insolvency, if there is a suspicion that the institutions knew at the time that the company was in financial difficulty.

The banks have denied wrongdoing.

- REUTERS