Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Deutsche Bank is being sued for more than £600mn by four former employees seeking damages in connection with a probe by the lender that contributed to their convictions by an Italian court.
The German bank disclosed the size of the legal claim for the first time in its annual report on Thursday, after the four former senior Deutsche bankers launched legal proceedings in London’s High Court last year.
The lawsuit is the latest legal claim Deutsche is facing over its handling of an internal audit that contributed to the four being convicted by a Milan criminal court in 2019. The convictions were overturned on appeal.
The former employees are seeking damages for “alleged harm caused to their careers by the Italian criminal proceedings and conviction”, Deutsche said.
The 2013 internal probe was overseen by Christian Sewing, then head of audit, and now the chief executive. It related to complex transactions that Deutsche entered into with Italian lender Monte dei Paschi di Siena in 2008.
The claim underscores how Deutsche remains entangled in some longstanding legal issues despite management spending years trying to repair the bank’s reputation and paying costly settlements and penalties.
The bank’s relationship with the late paedophile financier Jeffrey Epstein was also thrust back into the spotlight in recent weeks, after tens of thousands of internal Deutsche emails and documents were released by the US Department of Justice.
Dario Schiraldi, another ex-Deutsche banker, filed a €152mn claim against the lender in Frankfurt in 2024, arguing that the allegedly flawed internal audit damaged his career.
Michele Foresti, Deutsche’s former head of structured trading, agreed a settlement with the bank after launching a separate lawsuit in London last year.
The six bankers were sentenced to up to four years and eight months in prison for abetting false accounting and market manipulation in a scandal involving Italian bank Monte dei Paschi. They did not serve any jail time and the convictions were overturned in 2022.
The audit report became a cornerstone of the Milan trial, in which prosecutors alleged that trades orchestrated by the bankers helped Monte dei Paschi conceal hundreds of millions of euros in losses between 2008 and 2012.
When the appeal judges overturned the original court decision, they criticised both the Deutsche audit and the lower court’s reliance on it.
The four bankers suing Deutsche in London — Michele Faissola, Ivor Dunbar, Marco Veroni and Matteo Vaghi — are expected to centre their case on the internal audit overseen by Sewing.
The proceedings brought in the English courts risk further extending a saga that has spanned more than a decade, but in which the role of Sewing has only recently become apparent.
The six ex-employees were involved in a €2.2bn deal with Monte dei Paschi starting in 2008, which later attracted regulatory scrutiny and prompted the bank to commission the probe five years later.
Deutsche said it “considers all such claims to be without merit and will defend itself against them robustly, including disputing the inflated, unrealistic alleged losses claimed”.
The bank did not disclose if it made any provisions for the cases.
Credit: Source link
