Deutsche Bank scandal
The inside story of how Deutsche Bank made a $462m loss disappear
'You can book a [profit] in front and spread losses over time? We should do it for Deutsche Bank'
On December 1 2008, most of the world’s banks were still panicking through the financial crisis. Lehman Brothers had collapsed. Merrill Lynch had been sold. Citigroup and others had required multibillion-dollar bail-outs to survive. But not every institution appeared to be in free fall. That afternoon, at the London outpost of Deutsche Bank, the stolid-seeming, €2-trillion German powerhouse, a group of financiers met to consider a proposal from a team led by a trim, 40-year-old banker named Michele Faissola. The scion of an Italian banking family, Faissola was the head of Deutsche’s global rates unit, a division that created and sold financial instruments tied to interest rates. He’d been studying the problems of one of Deutsche’s clients, Italy’s Banca Monte dei Paschi di Siena, which, as the crisis raged, was down €367m ($462m at the time) on a single investment. Losing that much money was bad; having to include it in the bank’s year-end report to the public, as required by Italia...
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