Prosecutors probe Deutsche Bank for Italian debt sale

MILAN / AP-BLOOMBERG

Italian prosecutors are investigating top former Deutsche Bank management on suspicion of market manipulation related to the sale of €7 billion of Italian government bonds in 2011.
News agency ANSA reported that financial police have taken depositions and seized documents in Deutsche Bank’s Italian headquarters in Milan in recent days.
Deutsche Bank, based in Frankfurt, Germany, said it is cooperating with authorities and that it responded to a related inquiry by market regulator Consob in 2011.
Prosecutors in the southern seaport of Trani are investigating five former managers, including former CEOs Josef Ackermann and Anshu Jain and current co-CEO Juergen Fitschen, for allegedly manipulating the market by saying publicly that Italy’s debt was sustainable while hiding plans to dispose of most of the bank’s 8-billion-euro Italian debt load.
However, Deutsche Bank AG said it didn’t breach any rules in Italy, following media reports that five former executives of Germany’s largest lender are being probed over alleged market manipulation.
The bank is “confident” that it “acted appropriately,” it said in an e-mailed statement on Friday.
Deutsche Bank co-Chief Executive Officer John Cryan has been selling risky assets and toughening internal compliance to restore investor confidence, hurt by 12.6 billion euros in costs linked to past misconduct. While the bank said last month that it’s “optimistic” that it will be able to settle “significant” litigation cases this year, Cryan has signaled legal charges may help spark another loss this year.
“Italy is a leading European economy and a very important market for us,” a spokesman for Deutsche Bank said in the statement. “We will of course continue to cooperate with the authorities in any review of this issue.”
In 2011, Italy was battling to stave off contagion from the region’s spreading fiscal crisis that forced countries from Ireland to Portugal into bailouts. While the nation’s government weathered the turmoil without tapping aid, the risk premium investors demanded to hold Italy’s 10-year debt over German bunds surged to an euro-era high at the time.
Deutsche Bank shares have dropped about 35 percent this year, while the 39-member Bloomberg Europe Banks and Financial Services Index decreased 23 percent.
Deutsche Bank is a German global banking and financial services company with its headquarters in the Deutsche Bank Twin Towers in Frankfurt. It has more than 100,000 employees in over 70 countries, and has a large presence in Europe, the Americas, Asia-Pacific and the emerging markets.