Top Firm Still Faces Whistleblower Threat

Deutsche Bank - Foyer

Repercussions from Deutsche Bank's massive pre-crisis position in credit derivatives are still being felt.

The Financial Times reports that Stefan Krause, the bank’s CFO, recently devoted part of an investor presentation to allegations from former employees that the bank hid $4bn-$12bn in paper losses on complex derivatives known as leveraged super senior trades.

Matthew Simpson, a senior trader, Eric Ben-Artzi, a risk manager, and a third individual who requested anonymity have told the Securities and Exchange Commission (SEC) that Deutsche failed to properly account for paper losses on the trades.

The newspaper also says that accounting experts say the bank appears to have improperly accounted for billions of dollars of credit derivatives trades by failing to value adequately the risk that its trading counterparties could walk away.

The SEC is thought to be looking into the matter.

Finally, Reuters reports that consolidation of European banks is not yet at an end, and Germany's sector with its many small banks will have to change, the co-CEO of Deutsche Bank told a German newspaper last week.

Position in derivatives haunts Deutsche (subscriber content)

Experts back Deutsche whistleblowers (subscriber content)

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