The European Central Bank announced on November 25 that it has begun a formal review of Deutsche Bank’s financial reporting, focusing on the bank’s use of netting practices and other accounting methods that may have inflated its reported financial strength. The review follows allegations from former Deutsche Bank employee Dario Schiraldi, who is suing the bank for €152 million and claims the bank understated its leverage by more than €200 billion in its 2024 statements.
Deutsche Bank has denied the allegations, stating that its netting arrangements comply with IFRS 9 and industry norms. The bank maintains that netting is used to reduce credit risk and capital requirements, and that its Common Equity Tier 1 ratio stood at 14.5 % with a total leverage exposure of €1.3 trillion at the end of Q3 2025—figures that exceed regulatory minimums.
The ECB’s review could lead to regulatory sanctions, fines, or other enforcement actions that would affect the bank’s capital ratios and market reputation. The investigation is part of a broader assessment of capital regulation that has already seen Deutsche Bank fined $186 million by the U.S. Federal Reserve for anti‑money‑laundering violations and €100 000 by the ECB for misreporting reserve data.
Historically, Deutsche Bank reclassified certain repo transactions as derivatives in 2013 to continue using netting, a practice that global regulators banned in 2014. This pattern of aggressive accounting has raised concerns about the bank’s transparency and compliance culture.
While no immediate market reaction data is available, the ECB’s scrutiny signals heightened regulatory attention. Investors may reassess the bank’s risk profile and potential future regulatory costs, which could influence long‑term capital adequacy and strategic planning.
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