Deutsche Bundesbank, the central bank of Germany, has initiated a probe against Deutsche Bank over improper valuation of credit derivatives that led to concealing up to $12bn in losses during the financial crisis of 2007-2009.
Sources familiar with the matter were quoted by the Financial Times as saying that the central bank’s authorities will soon start an inquiry into allegations that Deutsche bank hid loses that resulted in avoiding a bailout package.
The newspaper said that the investigation is in its primary stage and that the bank’s former staffs will be questioned to know its dealings in complex credit derivatives between 2006 and 2009.
The complainants including Eric Ben-Artzi, a risk manager, and Matthew Simpson, a senior trader, claimed that if the bank had carried out proper valuation on the positions, it would have faced over $4bn of losses to nearly $12bn.
Apart from Bundesbank, the US Securities and Exchange Commission (SEC) is also enquiring into the matter, the news agency reported in December 2012.
Deutsche bank has denied the allegations against ongoing investigation of billions of dollars of losses on leveraged super senior trades.
The lender said that the allegations were "more than two and a half years old" and had been the "subject of a careful and thorough" investigation by a law firm, which found them "wholly unfounded."
"Moreover, the investigation revealed that these allegations stem from people without responsibility for, or personal knowledge of, key facts and information," the bank added.
"We have and will continue to co-operate fully with our regulators on this matter."