An Italian judge has convicted Deutsche Bank of fraud, as the bank struggles to save its reputation amid widening probes over tax evasion and rate-fixing after the departure of its former CEO Josef Ackermann.December 12, 2012 By Valentina Pop Article from EU Observer
Deutsche Bank was convicted together with US giant JP Morgan Chase, Switzerland’s UBS and a German-Irish bank, Depfa, for their role in overseeing fraud by their bankers in the sale of interest rate bets to the city of Milan. About €90 million are to be seized from the four banks, who will also have to pay €1 million each in fines.
The case is only the first in a series of similar complaints: around 600 Italian municipalities had bought such derivatives and lost about €4 billion during the financial crisis, according to the Italian central bank.
In parallel, Deutsche Bank is part of a worldwide investigation for altering the British benchmark interest rate (Libor) and its euro-counterpart (Euribor). Once the European Central Bank takes over the supervision of eurozone’s largest banks, Deutsche Bank will fall under the new scrutiny.
The Milan sentence, which can still be appealed, also comes after Deutsche Bank had its Frankfurt headquarters raided last week in a probe for alleged tax evasion on profits cashed in from trading with carbon permits.
Germany’s largest commercial bank, once renowned for its solid and risk-averse business, has been transformed over the last decade into an aggressive investor and speculator with risky bets known as derivatives, largely due to the leadership of Swiss top banker Josef Ackermann, who stepped down earlier this year.
The US Senate named the German bank alongside Goldman Sachs as the two institutions that played a “key role” in the financial crisis.
But unlike Denmark’s Danske Bank whose management apologised for its role in the financial crisis, Ackermann still got praise for it.
At his opulent farewell party, Ackermann received video-testimonials including from EU commissioner Olli Rehn, who praised him for “restoring confidence in the financial sector.”
Ackermann’s successor, Juergen Fitschen, who vowed to change the company’s culture, has meanwhile also come under fire in Germany for having phoned up the regional governor to complain about the police raids which are denting his bank’s reputation.