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Deutsche Bank Said to Review Its Valuations of Inflation Swaps 

October 26, 2016

Matt Scully, Bloomberg

Deutsche Bank AG is reviewing whether it misstated the value of derivatives in its interest-rate trading business, and is sharing its findings with U.S. authorities, according to people with knowledge of the situation.

The bank is looking at valuations on a type of derivative known as zero-coupon inflation swaps, said the people, who asked not to be identified because the matter is confidential. After finding valuations that diverged from internal models, it began questioning traders, the people said. Troy Gravitt, a Deutsche Bank spokesman, declined to comment.

Deutsche Bank Chief Executive Officer John Cryan vowed in February to try to resolve his institution’s legal challenges swiftly. He is still working on it. The bank has been facing regulatory and enforcement pressure around the world, including a money-laundering investigation tied to its Russia operations, inquiries into mortgage-bond trading before and after the financial crisis and charges that the bank colluded to help falsify the accounts of Italy’s Banca Monte dei Paschi di Siena SpA.

In the probe into its pre-crisis mortgage bond sales, the U.S. Department of Justice asked in September for a $14 billion settlement, an amount the bank said it wouldn’t pay. Read more

 
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