By Silvia Ognibene
SIENA Italy (Reuters) - An Italian court on Friday sentenced former Banca Monte dei Paschi di Siena (MI:BMPS) chairman Giuseppe Mussari to three years and six months in jail for misleading regulators in relation to a 2009 derivative trade with Nomura (T:8604) that prosecutors said was used to conceal losses.
The court in Siena, where Italy's third-biggest lender is based, also sentenced former chief executive Antonio Vigni and ex-finance boss Gianluca Baldassarri to the same jail term.
Prosecutors had asked for a seven-year jail sentence for Mussari and six years for Vigni and Baldassarri.
Defence lawyers, who had asked the court to acquit their clients, said they would lodge an appeal against the sentence, which was read by Court President Leonardo Grassi during a public hearing.
"We are very surprised and obviously we will appeal," Mussari's lawyer Fabio Pisillo told reporters afterwards.
Monte dei Paschi, which carried out a 5-billion euro capital increase in June to help pay back state aid, has come under renewed pressure after failing to pass a Europe-wide banking review and must now plug a 2.1 billion euro (1.65 billion British pound) capital shortfall.
Prosecutors had accused Mussari, Vigni and Baldassarri of hiding a document known as a mandate agreement, which prosecutors and regulators said made clear that the derivative, called Alexandria, was linked to the acquisition of 3 billion euros worth of long-term Italian government bonds by Monte dei Paschi.
The link between the two trades meant they should have received different accounting treatment, which would have shown heavy losses.
Alexandria and two other derivatives trades ultimately forced Monte Paschi to restate its accounts and book a loss of 730 million euros on its 2012 results.
New management at the bank, now working on a plan to fill the 2.1-billion-euro capital hole, has said it only discovered the existence of the mandate agreement when it was found in a safe in Vigni's former office in October 2012, more than three years after it was signed.
(Writing by Danilo Masoni; editing by Jason Neely)