Italian prosecutor investigates Deutsche Bank over 2011 bond sale

Fri May 6, 2016 1:12pm EDT
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By Vincenzo Damiani

BARI, Italy (Reuters) - An Italian prosecutor is investigating Deutsche Bank (DBKGn.DE: Quote) over its sale of 7 billion euros ($8 billion) of Italian government bonds five years ago, an investigative source told Reuters.

A prosecutor in Trani, a town in southern Italy, is investigating because Deutsche Bank allegedly told clients in a research note in early 2011 that Italy's public debt was no cause for concern, and then sold almost 90 percent of its own holding of the country's bonds, the source said on Friday.

"We do not believe there is a case to answer here and are confident that we acted appropriately," a spokesman for Deutsche Bank said in an email to Reuters, adding the German lender was cooperating with Italian authorities.

Deutsche Bank sold the bonds in the first half of 2011 as Italy slid toward a debt crisis that eventually brought down the government of former Prime Minister Silvio Berlusconi.

Italy's economy ministry said in August 2011 that Deutsche Bank had explained the sale by saying it needed to balance out its exposure to Italian debt after taking on more when it bought out Deutsche Postbank in 2010.

Five former Deutsche Bank managers as well as the bank itself are under investigation in Trani, the source added.

The same prosecutor has, in recent years, also opened investigations into ratings agencies Moody's, Standard & Poor's and Fitch, saying their reports on Italy and its banks during the crisis were mismanaged and provoked sharp losses on the Milan stock market.

The case against Moody's was dropped before a trial began in Trani last year. The case against Fitch Italia and its country head was moved to Milan, where a judge threw it out on Friday.   Continued...

A statue is seen next to the logo of Germany's Deutsche Bank in Frankfurt, Germany, January 26, 2016.    REUTERS/Kai Pfaffenbach/File Photo