Banks would not have lent money to Parmalat if they thought it was in trouble, lawyers argued yesterday on the first day of the trial of four investment banks over their role in the milk company's collapse.

'Neither Citigroup nor its employees did anything wrong… Why would the bank have lent $500 million to Parmalat if it thought it was in trouble?' asked Nerio Dioda, the lawyer for the bank, on the first day of the trial in Milan, Bloomberg reported.

Citigroup, Deutsche Bank, UBS and Morgan Stanley have all been sent to trial, on charges that they manipulated the market by withholding information about Parmalat's problems.

The company collapsed in 2003 after disclosing a huge accounting black hole.

The charges of market manipulation carry a potential sentence of up to 12 years, and fines for the banks of up to €1m for each count.

Further Reading:

Read the Bloomberg story: Citigroup, UBS Lawyers Deny Wrongdoing on Parmalat