Deutsche under radar in Treasury rigging probe

Bloomberg

Deutsche Bank AG has emerged as a focus of a probe into whether traders rigged auctions for USA government debt, the New York Post reported, citing unidentified people familiar with the matter.
No bank has been accused of wrongdoing, but investigators are narrowing their focus after requesting documents and communications from all of the 22 primary dealers in Treasuries, the newspaper reported.
That group includes the biggest Wall Street banks and their counterparts in Europe and Asia, the Post said. The brokerage arm of Wells Fargo & Co joined the primary dealer group in April to become the 23rd member.
Deutsche Bank has not disclosed that it is under investigation for Treasury trading, the newspaper reported.
“Deutsche Bank is cooperating with the industrywide investigations into the auction market,” said Amy Chang, a spokeswoman for the firm in Hong Kong. “Based on our review to date, we have no reason to believe we are the focal point of any investigation into this market.”
USA authorities have been gathering information from primary dealers, scrutinising how firms handled communications and whether any traders sought to improperly tilt Treasury auctions in their favour, people familiar with the situation said last year. The broad inquiries also were said to encompass when-issued securities — instruments that are generally sold to investors to guarantee their ability to get their hands on a bond, bill or note once it’s issued. Investor lawsuits claim banks artificially sought to inflate prices of those instruments, later profiting in auctions.
In a November filing, Goldman Sachs Group In. added the offering and auction of securities, as well as “when-issued trading,” to a list of activities that regulators and other government bodies are investigating. It said it’s cooperating with all
investigations.
Deutsche Bank pre-announced a 2015 loss before income taxes of approximately EUR 6.1 billion and a net loss of approximately EUR 6.7 billion. Following this announcement, a bank analyst at Citi declared, “We believe a capital increase now looks inevitable and see an equity shortfall of up to €7 billion, on the basis that Deutsche may be forced to book another €3 billion to €4 billion of litigation charges in 2016.”
According to the Scorpio Partnership Global Private Banking Benchmark 2014 the company had US$384.1bn of assets under
management, an increase of 13.7% on 2013.
The bank offers financial products and services for corporate and institutional clients along with private and business clients. Deutsche Bank’s core business is investment banking, which represents 50% of equity,
75% of leverage assets and 50% of profits.