Insight: German reliance on Deutsche Bank outweighs scandals
By Edward Taylor and Philipp Halstrick
FRANKFURT (Reuters) - Germany has become so dependent on Deutsche Bank to grease the wheels of its export driven economy that it looks willing to gloss over scandals involving its largest bank.
Deutsche is one of several European banks under investigation by regulators in Europe and the United States for its suspected role in rigging benchmark interest rates. It is cooperating with German authorities in a separate inquiry into alleged tax fraud. Deutsche has denied allegations it misvalued derivatives and mis-sold mortgage-backed securities.
Such an array of inquiries could be expected to damage any bank's reputation. But back-up from business leaders and key members of the bank's supervisory board appear to be helping Deutsche's new co-chief executives Anshu Jain and Juergen Fitschen put the scandals behind them. The two men, with more than 40 years experience at Deutsche between them, took over as co-CEOs on June 1.
This bedrock of support is crucial for Deutsche, especially in a German election year when banks' perceived excesses and misdemeanors could become a campaign issue.
The newest revelations for Deutsche will come in the next few days when the German regulator issues a report on the bank's alleged involvement in the manipulation of Libor, a global interest rate benchmark.
The report will test Germany's commitment to keeping Deutsche strong for the sake of its export led economy. That commitment is a common theme to surface in interviews Reuters has conducted with current and former Deutsche staff, business leaders, sources at the regulator and bank directors.
Several sources familiar with the regulator's report have said it will focus on "organizational flaws" rather than placing blame on Jain or Fitschen, making it less likely the Berlin political establishment will call for them to go.
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