Deutsche Bank, a firm seeking to overhaul how it manages risks, made a bet on U.S. inflation that puts the firm on course to lose as much as $60 million, people familiar with the matter said.
Bloomberg news reports that the trade used derivative products tied to U.S. inflation, said the people, who requested anonymity because the details aren’t public. Deutsche Ban has been examining whether traders breached risk limits on the deal, some of the people said. The case has been escalated to the bank’s supervisory board, one person said.
Such a loss would be a setback for CEO John Cryan, who has been trying to improve the lender’s risk and operational controls that have drawn scorn from regulators around the world. A risk limit violation could indicate a weakness in the bank’s oversight of its traders in a business that earned about $270 million in the first quarter. Just two months ago, the Federal Reserve fined the firm for failing to ensure that traders abide by the Volcker Rule, a U.S. law that restricts lenders from using their own funds to make speculative trades.
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