The Deutsche Bank, a global banking and financial services company headquartered in Frankfurt, suddenly took centre stage in the unfolding Libor Scandal last Wednesday, as the Wall Street Journal revealed the bank had in 2008 turned a net profit of €500m from bets on small changes in the benchmark lending rate. Although the WSJ is not accusing DB of having manipulated the Libor rate itself, it has stressed the high risk of undertaking such operations in the midst of the financial crisis.
These allegations are the latest in a long string of bad news for DB, which has been trying to restore confidence in its operations among its shareholders and the wider German public after recent accusations of tax evasion, money laundering and obstruction of justice. DB is currently under investigation for all these charges, which are damaging its previously largely unblemished reputation.
BaFin, the German financial market supervisor, is preparing a special report on DB’s involvement in the Libor Scandal. Its head Elke König has already urged DB to “make provisions for anticipated loss”. Yet German law forbids the publication of such probes without the formal agreement of the institutions involved. Pressure is now mounting among the German public and in parts of the opposition for a full disclosure of all illegal activities. It remains to be seen how much of the review will be made public.