Trani investigates Deutsche Bank for the moves on Italian BTP-2011 – The Republic

MILAN – The Deutsche Bank of Frankfurt am Main is suspected of market manipulation from Trani prosecution along with former management of the group. The story concerns the massive operations, for 7 billion euro in value, made on Italian government bonds between January and June 2011. Then, we recall, is screwed to the sovereign debt crisis that would lead soon to letter signed by the ECB Trichet and Draghi, which effectively marked the end of the Tremonti-Berlusconi government and the advent of “professors” by Mario Monti.

in recent days – we learn today to a report in the ‘ Ansa – the military police of Bari Finance, together with the public prosecutor Michele Ruggiero, have made seizures of documents and email in German institute Milan office, in the square of the calendar, and they listened to witnesses. Within the context of Trani prosecution, the suspects for for market manipulation are five. It is the former president of Deutsche Bank Josef Ackermann, the former co-CEOs Anshuman Jain and Jurgen Fitschen (the latter is currently co-outgoing CEO of the Bank), former head of the risks Hugo Banziger, and Stefan Krause, former chief financial officer and former member of the board of Db.

At the publication of the budget in the first six months of 2011, the German institute, much international attention focused on the DB move drastically reduce the exposure on Italian government bonds. The news emerged then, in the middle of the hot summer in the spread when the spread between BTPs and Bund lived blaze that culminated well over 500 basis points (today we are around 130 points). A violent movement of the markets which led many to fear for the fate of Finance of the country, which is always approached more the example of Greece. At the end of July 2011, the DB move seemed a German ruling against Italy, so much so that we dedicated ample space the major financial newspapers, starting with the Financial Times. In the House, today’s news was welcomed by Renato Brunetta with the request to establish a commission of inquiry on what happened in that period.

The table extracted from balance sheet of Deutsche Bank, January-June 2011, above, shows that the net exposure to Italy’s sovereign risk (the third column from the left, under “Italy”) was dropped to 996 million in the first half of that year, compared to over 8 billion by the end of 2011 (the next to last column). It was a descent that go unnoticed, because of the voltage levels of that time: in fact, the banks indicated in special mirrors in their periodic accounts indicating exposure to the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain ). On the other hand, at the time the sale of risky securities such as those of “device”, or management of exposure to that risk by the lighting of the hedging derivatives, was on the agenda. European stress tests on the year 2010 showed significant cuts on the portfolio of Italian government bonds by Santander, BBVA, Crédit Agricole, HSBC, Intesa Sanpaolo and Societe Generale.

The trend of spread – the spread between the yield on ten-year BTPs and German Bund counterparts – since the beginning of 2011 to present. E ‘became the thermometer debt crisis, especially in the summer and autumn of that year, when he touched all-time highs in area 550 basis points. Today we are at 130 points. Read the article

In this case, the former is accused DB management market manipulation because, while talking to the financial markets the sustainability of Italy’s sovereign debt, hiding the same markets and the Italian Ministry of Economy (MEF) the real intention to drastically reduce and in the very short term (in the first half of 2011) the possession of the Italian debt securities in the portfolio at the end of 2010 amounted to eight billion euro. The massive sale of Italian government bonds to over seven billion euro by June 2011 – according to the prosecutor of Trani Michele Ruggiero – has altered the market value of these securities because it was made in violation of regulations. The same Prosecution has also been accusations against the rating agencies – for judgments on Italy – and moved on the derivatives of the state.

According to the indictment, Deutsche Bank in three publications during the period from February to March 2011. but the real intentions – in the opinion of the prosecution – led to massive sale of Italian government bonds ‘over the counter’ – ie, non-public and regulated by the authorities, but based on the agreement between two parties – without being disclosed to the financial market regulated and justified “falsely” a posteriori (in the informative periodical of June 2011) with the need to reduce the exposure of the group to Italy’s sovereign risk, following the acquisition of Postbank at the end of 2010. essentially , according to the bank’s reasons the choice was dictated by the desire to bring back the exposure to Italy to historical levels, which had soared to its acquisition of the institute who had in many BTP belly. In the same period, Deutsche Bank bought about 1.4 billion credit default swaps (CDS) hedging of risk exposure to the Peninsula: are insurance contracts against the risk of failure of an underlying financial product, in this case the debt Italian. These purchases – allegedly – were not disclosed by the banking group nor to the financial markets or to the Treasury. Now, the German bank informed that “is cooperating with the authorities in this investigation. In 2011, the bank had responded to a request made by Consob in relation to this incident and had provided the information and related documents”. By the Authority of the markets were not parties sanctions.

According to the prosecution’s reasoning, Deutsche Bank authorizing the sale of Italian government bonds, CDS and buying simultaneously communicating at the same time the financial markets sustainability Italian public debt, has made manipulative conduct of information-operational market. These maneuvers are deemed suitable for altering the regular formation of the market price of Italian government bonds in both the first half of 2011 (when the market ignored the disposals of securities) as well as after regular publication in June 2011. On the latter occasion the market and operators – says the prosecutor Ruggiero – learned of massive and sudden reduction of the Bank’s exposure to Italian interpreting it as a risk. “clear signal of no confidence in the group against the Italian sovereign debt held”

the German bank reiterates the view that “the investigation without foundation. we are confident that he acted properly. Italy’s leading economy in Europe and a very important market for us. we will continue to cooperate with the authorities in each phase of this affair. “