(March 12): Deutsche Bank AG faces almost US$1 billion in combined claims from five former managers who say they were wrongfully blamed for the Banca Monte dei Paschi di Siena SpA accounting scandal.
Four ex-employees who have filed claims in English courts are seeking over £600 million in damages for alleged harm caused to their careers, the German lender said in its annual report, published on Thursday.
Dario Schiraldi, a former top manager from Deutsche Bank’s asset and wealth management division, filed a case in Frankfurt claiming around €152 million over the issue. Another case in the matter has been settled.
Deutsche Bank “has not disclosed whether it has established a provision or contingent liability with respect to these matters because it has concluded that such disclosure can be expected to prejudice seriously their outcome,” it said in the annual report.
Still, it warned of significantly higher litigation charges this year. The stock dropped as much as 3.9%, making it the worst performer in the Stoxx Europe 600 Banks index.
The cases against Deutsche Bank are the latest instances of former bank executives seeking damages after courts in Europe overturned previous convictions going back as much as a decade. Those convictions had made it difficult for the affected individuals to find similar work.
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One other example is former UBS Group AG star trader Tom Hayes who’s accusing his ex-employer of handing him over on a “silver platter” to global prosecutors in order to protect itself.
Hayes’ lawyers have said in court filings that the bank should pay at least US$400 million — a combination of lost earnings as well as significant emotional, physical and mental trauma including the end of his marriage.
A lawsuit by a sixth former employee, Michele Foresti, has been settled, Deutsche Bank said last month, without giving details.
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In the Deutsche Bank case, Monte Paschi managers were accused of colluding with staff at the German lender to hide losses at the Italian firm by using complex derivative trades, leading to a misrepresentation of its finances between 2008 and 2012.
An Italian court sentenced the managers to jail in 2019, but they were acquitted by a Milan appeals court three years later. Italy’s top court upheld the acquittal in 2023, clearing the way for them to seek damages.
Deutsche Bank said at the time it was “pleased” with the court’s decision and that it had always firmly believed the bank’s individuals were innocent.
The group suing Deutsche Bank in the UK includes Michele Faissola, former head of asset and wealth management, and Ivor Scott Dunbar, ex co-head of global capital markets. Matteo Angelo Vaghi, ex-head of Italian sales, and former account manager Marco Veroni also sued in the UK.
At the centre of the former employees’ claims for damages now is an audit report commissioned within Deutsche Bank in 2013 reviewing the accounting of repo deals the German lender did with Monte Paschi.
The ex-staffers argued that the review wasn’t handled neutrally and unfairly pinned blame on them, even claiming they manipulated the relevant market prices. At the time, current chief executive officer Christian Sewing, who then had a different role, was put in charge of the report, people familiar with the case previously said.
The company reiterated in the report that it considers the ex-employees’ claims to be without merit and that it will defend itself against them robustly, including disputing the “inflated, unrealistic alleged losses” claimed.
The lender’s annual report showed it set aside €293 million in new provisions for civil litigation last year.
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