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How Deutsche Bank Made a $462 Million Loss Disappear
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How Deutsche Bank Made a $462 Million Loss Disappear

A dubious trade leads to a criminal trial for Europe’s most important bank.

Vernon Silver and Elisa Martinuzzi
Bloomberg Businessweek , 2017
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During the international financial turmoil of late 2008, executives at financing giant Deutsche Bank took action to forestall a nearly half-billion-dollar loss for a client, Italy’s Banca Monte dei Paschi di Siena – the globe’s oldest banking institution. In a chronicle that reads like a financial noir, journalists Vernon Silver and Elisa Martinuzzi describe in detail an unorthodox scheme by Deutsche Bank to hide losses for Monte dei Paschi using complex derivative transactions. As of early 2017, government regulators and the courts are still investigating and prosecuting a criminal scandal, which has led to Monte dei Paschi’s government takeover, Deutsche Bank’s loss of industry credibility, a suicide and perhaps a murder. For executives seeking a fascinating narrative of deception and financial alchemy, getAbstract recommends this compelling report.

Summary

In the final months of 2008, international financial institutions were struggling. For Italy’s Banca Monte dei Paschi di Siena, the situation could not get any worse: Executives faced a potential year-end loss of €367 million [then $462 million] stemming from a 2002 financial arrangement with Deutsche Bank. In reporting such a loss, as Italian banking laws demanded, Monte dei Paschi would face the specter of a government takeover, a ruinous outcome for an institution that dated back to 1472.

With time running out, Deutsche Bank financiers – led by Michele ...

About the Authors

Vernon Silver and Elisa Martinuzzi are journalists for Bloomberg Businessweek.

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