Below is a note from the Municipality of Rieti:
The dispute between the Municipality of Rieti and Unicredit for the 2006 Swap derivative contract ended with a ruling in favor of the Rieti institution, which became final. In recent days, in fact, Unicredit decided not to appeal to the Court of Cassation against the sentence of the Court of Appeal of Venice which had seen the reasons of the Municipality of Rieti recognized, defended by the lawyer Raffaello Principi.
Therefore, the sentence became final, irrevocably sanctioning the nullity of the derivative contract stipulated at the time by the Municipality of Rieti with Unicredit. In the reasons for the sentence, the Court of Appeal of Venice established, among other things, that “the Municipality of Rieti was not in a position to know, from time to time, the actual value of the derivative, at which it could be closed early or made take over a third party unrelated to the operation” and confirmed “the judgment of nullity of the contract called ‘Collar Swap’ concluded by the parties on 28 June 2006”.
As is known, the swap belongs to the category of derivative financial instruments and consists of the exchange of cash flows between two counterparties, determined in relation to an underlying financial instrument or asset.
“The sentence represents a significant result for the coffers of the institution which would have risked having to pay out a few million euros – comments the Mayor of Rieti, Daniele Sinibaldi – The choice of the credit institution not to appeal the second degree judgment , demonstrates the reasons of the Municipality of Rieti. The conclusion of this very long affair linked to derivative financial instruments, which have weighed heavily on local authorities throughout Italy over the last 20 years, represents yet another long-standing issue resolved by our Administration and helps the Authority in the process of reorganizing its finances” .
