Deutsche Bank (DB.US) Former Executive Seeks Over $800 Million in Damages, Historical Scandal May Trigger Annual Financial "Powder Keg"

Deutsche Bank (DB.US) stated that due to ongoing disputes with some former executives, litigation expenses are expected to rise significantly this year. These former executives insist they were unfairly accused and labeled as the “culprits” behind the accounting scandal at Banca Monte dei Paschi di Siena SpA in Italy. In its annual report released on Thursday, the German lender disclosed that four former employees have filed lawsuits in England, seeking over £600 million (approximately $800 million) in damages for alleged harm to their careers.

Dario Schiraldi, a former executive in Deutsche Bank’s Asset and Wealth Management division, has filed a lawsuit in Frankfurt, claiming approximately €152 million in damages. The bank previously announced that a lawsuit filed by sixth employee Michele Foresti had been settled.

Deutsche Bank stated, “It has not yet been disclosed whether provisions have been made or whether contingent liabilities have been recognized for these matters, as the bank believes such disclosures could seriously hinder the outcome of related proceedings.”

In the initial high-profile Italian criminal case, management at Banca Monte dei Paschi di Siena was accused of colluding with Deutsche Bank employees to deliberately conceal the Italian bank’s losses through a series of complex derivatives transactions, leading to false financial statements from 2008 to 2012. Moreover, these former Deutsche Bank managers were also accused of market manipulation. However, due to insufficient evidence to establish preliminary guilt, an appellate court in Milan acquitted the six individuals in 2022, releasing them.

The core of the allegations by these former employees centers on an audit report commissioned by Deutsche Bank in 2013. The report reviewed the accounting treatment of repurchase agreements between the German bank and Banca Monte dei Paschi di Siena. The former employees insist that the review process lacked neutrality, unfairly blamed them, and even claimed they manipulated relevant market prices. According to sources, Christian Sewing, then responsible and now CEO, was appointed to oversee the report.

Deutsche Bank reiterated in its report that it firmly believes all such allegations lack legal basis and will mount a vigorous defense, including explicitly disputing claims of “exaggerated and unrealistic losses.”

Among the group members suing Deutsche Bank in England are former Asset and Wealth Management head Michele Faissola and former Global Capital Markets Co-Head Ivor Scott Dunbar. Additionally, former Italy Sales Head Matteo Angelo Vaghi and former Client Manager Marco Veroni have also filed lawsuits in England.