The bank managed to lend to firms from Brazil to Italy while making the transactions disappear from its balance sheet, even though it still is owed the money, according to four people with knowledge of the practice and internal documents provided to Bloomberg News.
Deals totaling $3.3bn involving Italy’s Banca Monte dei Paschi di Siena SpA and Banco do Brasil SA reveal a technique that obscured Deutsche Bank’s lending reach when it sent cash to the banks, the documents show. The company had talks about a similar loan to Dexia weeks before that firm was rescued, according to the documents, and it used the same accounting for other deals through 2011, two of the people with knowledge of the transactions said.
'We should be very concerned about the opacity and complexity of these transactions', said Joshua Rosner, an analyst at research firm Graham Fisher & Co. in New York.
Kathryn Hanes, a spokeswoman for Deutsche Bank, said the bank follows accounting rules 'meticulously, conservatively and taking into account their intended spirit' and started reporting 'these positions on a gross basis for even greater transparency'. She said the amount of any offset loans is “immaterial to our balance sheet and key ratios'.
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