Deutsche Bank seeks to avoid any seizure in Monte Paschi probe: sources

Mon Apr 22, 2013 10:10am EDT
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By Silvia Ognibene

SIENA, Italy (Reuters) - Lawyers for Deutsche Bank (DBKGn.DE: Quote) met Italian prosecutors investigating loss-making trades at Italian bank Monte dei Paschi (BMPS.MI: Quote) on Monday to avoid any risk of a seizure order, three sources with direct knowledge of the matter told Reuters.

A financial derivatives deal known as "Santorini" in 2008 between Deutsche Bank and Monte dei Paschi di Siena is one of three trades at the heart of a probe into alleged fraud at Italy's third biggest lender.

The trades exacerbated a capital shortfall that last year forced Monte dei Paschi to request 4 billion euros ($5.2 billion) of state aid and brought it close to collapse.

Prosecutors in Siena last week ordered the seizure of up to 1.95 billion euros from Japanese bank Nomura (8604.T: Quote), which carried out another derivatives deal, known as "Alexandria, with the Tuscan bank.

In the seizure warrant against Nomura, the Siena prosecutors describe the Alexandria and Santorini trades as "twin" operations.

"They (Deutsche Bank) are seeking a dialogue with the prosecutors given the similarities between Alexandria and Santorini," one of the sources said.

"They want to avoid becoming the target of a seizure measure like the one for Nomura," the source said.

Deutsche Bank declined to comment. The German bank has rejected any suggestion of wrongdoing, saying that the Santorini deal was subject to rigorous internal approval processes.   Continued...

A visitor walks past the bank's logo prior to Deutsche Bank's annual news conference in Frankfurt February 2, 2012. REUTERS/Kai Pfaffenbach