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Watchdog says Deutsche Bank mislead it over MPS trade-paper
January 7, 2014 / 3:06 PM / 4 years ago

Watchdog says Deutsche Bank mislead it over MPS trade-paper

FRANKFURT, Jan 7 (Reuters) - German financial watchdog Bafin has accused Deutsche Bank of misleading it over a controversial derivatives trade with Italian peer Monte dei Paschi di Siena and of falsely accounting for the deal, a newspaper reported.

Monte dei Paschi (MPS) and Deutsche Bank in December reached a deal to close the disputed derivative trade, which is at the heart of a judicial probe into alleged fraud at Italy’s third- biggest lender.

The 2008 deal, known as Santorini, is one of three derivative trades that forced MPS to take a hit of 730 million euros ($995.9 million) on its 2012 accounts.

“I think it is absolutely unacceptable that you (Deutsche Bank) apparently misinformed ... (Bafin) and other authorities over a long period of time and falsely accounted for the (Monte dei Paschi) transaction,” Bafin’s banking regulator Frauke Menke wrote in a letter to Deutsche Bank, according to a report by daily Die Welt published online on Tuesday.

The reported letter would represent the latest jab in a fight between Deutsche Bank and its regulator.

According to German media reports last weekend, Bafin has also said in a report that Deutsche Bank Co-Chief Executives Anshu Jain and Juergen Fitschen have made little impression so far in their efforts to restore the bank’s reputation.

According to Die Welt, Deutsche Bank had retroactively corrected its accounting for the Monte dei Paschi trade, citing a tardy flow of information between the bank’s trading and finance division.

“Particularly, the question arises why the finance unit was only now informed by the trading division,” Bafin wrote in the letter, dated November 2013, the newspaper said.

A Deutsche Bank spokesman said the lender is cooperating with regulatory authorities. “Together with them, we seek to investigate questions thoroughly and promptly.”

Bafin declined to comment. ($1 = 0.7330 euros) (Reporting by Arno Schuetze and Alexander Hübner; Editing by David Holmes)

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