There is no peace for the coffers of Deutsche Bank. The German Institute has registered a red of 1,6 billion dollars on a portfolio of 500 US municipal bonds purchased in 2007 for 7,8 billion dollars. The cause of the losses was the collapse of their valuation, which occurred due to the outbreak of the financial crisis.
The loss is one of the largest ever recorded by Deutsche Bank in a single deal, which is also accused of never disclosing it to investors.
But what happened? After the purchase, which took place 12 years ago, in March 2008 the bank decided to buy additional protection against the risk of default from Berkshire Hathaway for 140 million dollars, but "the shield" was not enough. The news was reported by the Wall Street Journal, according to which Deutsche Bank would continue to record losses for the next nine years, however failing to recognize the true current market value of the assets on the balance sheet. Only in 9 did the group's top management decide to close the matter and blame the loss which, however, was never clearly identified in the eyes of investors.
Not only that, the WSJ reports that the executives and auditors of Kpmg would have started a real debate on the real value of the portfolio, with the latter having raised more than one doubt as to whether the institute had set aside sufficient reserves to face the potential losses.
The loss incurred for this operation is equal to almost 4 times the reported profit for 2018 while the group closed the three previous financial statements in the red.
“The transaction was completed in 2016 as part of the closure of our non-core operating unit – a bank spokesman explained to the American newspaper – Lawyers and external auditors reviewed the transaction and confirmed that it was in line with accounting standards and practices".
The news had repercussions on the title which on the Frankfurt Stock Exchange yields 1,13% to 7,6 euros.
