Risk Management

Parmalat Settles With Three Banks

Merrill Lynch is among the three banks to settle, Citigroup and Bank of America are still holdouts.
Stephen TaubJune 19, 2007

Parmalat SpA announced that it settled civil lawsuits with three major international banks for a total of 72 million euros, or more than $96 million, stemming from the Italian food giant’s collapse in 2003.

Merrill Lynch agreed to pay Parmalat 29 million euros, or $39 million. This settles all claims against the US-based investment banking giant, Parmalat noted in a press release.

Banca Monte Parma SpA. agreed to pay 35 million euros, or $46.91 million, and ING Bank agreed to pay 8 million euros, or $10.72 million. Following the settlement, Parmalat and Banca Monte Parma and Parmalat and ING Bank each agreed to withdraw all pending actions.

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Parmalat, known in the United States for its long-lasting milk product, filed for bankruptcy on Christmas Eve of 2003. Its collapse was one of the worst financial scandals involving a European company in recent memory and ultimately represented a loss of about 14 billion euros ($18 billion).

Back in January, Deloitte & Touche SpA and Dianthus SpA agreed to pay $149 million to Parmalat to settle claims stemming from the company’s collapse.

Parmalat still has suits pending in the U.S. against Bank of America, Grant Thornton and Citigroup.

Last week, Citigroup Inc., UBS AG, Deutsche Bank AG and Morgan Stanley, as well as 13 managers from those banks were indicted in Milan for failing to take steps to prevent the crimes that caused the company’s collapse.

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