Photo: Flickr Elliot Brown
The Financial Times’ Tom Braithwaite, Kara Scannell and Michael Mackenzie are out with a big scoop that Deutsche Bank hid $12 billion in losses therefore avoiding a government bailout during the financial crisis, three former employees allege in complaints to the SEC. The FT reports, citing sources familiar, that the complaints allege that Deutsche misvalued a huge position in its credit derivatives portfolio by not taking into consideration the losses it faced when the market went down in 2007 to 2009.
If it did, it may have needed a bailout during the downturn.
All three allege that if Deutsche had accounted properly for its positions – worth $130bn on a notional level – its capital would have fallen to dangerous levels during the financial crisis and it might have required a government bail-out to survive.
The bank said in a statement to the newspaper that this is old news and that it was publicly reported back in 2011.