Deutsche Bank failed to recognise up to $12bn of paper losses during the financial crisis, helping the bank avoid a government bail-out, three former bank employees have alleged in complaints to US regulators.
The three complaints, made to regulators including the US Securities and Exchange Commission, claim that Deutsche misvalued a giant position in derivatives structures known as leveraged super senior trades, according to people famokiliar with the complaints. All three allege that if Deutsche had accounted properly for its positions – worth $130bn on a notional level – its capital would have fallen to dangerous levels in the financial crisis and it might have required a government bail-out to survive.
Instead, they allege, bank traders – with the knowledge of senior executives – avoided recording “mark-to-market”, or paper, losses during the turmoil in credit markets in 2007-09.