Germany’s largest lender Deutsche Bank has detected about $4 billion in suspicious transactions by its Russian clients, Bloomberg reported on Tuesday, citing several people with knowledge of the matter. The new findings are in addition to $6 billion in so-called mirror trades already flagged by the bank this year, bringing the total count to up to $10 billion.
The bank shared information about the suspicious trades with international watchdogs in September, the sources reportedly said. These suspicious mirror trades have allegedly allowed Russian investors to move money from one country to another without alerting authorities, in breach of sanctions placed against Russia after its annexation of Crimea.
The transactions saw clients using Deutsche Bank to buy securities in rubles only to sell them shortly after in a foreign currency. The Bank of Russia approached Deutsche Bank in October requesting the firm to examine the stock-trading activities of some clients in the country, Bloomberg reported.
Deutsche Bank reportedly called the volume of transactions under review "significant," adding that it is probing certain trades in Moscow and London.
"But the case has the potential of becoming as big as Libor," a source told Reuters, adding that the bank has put aside less than 1 billion euros ($1.1 billion) to resolve the matter.
The inquiry into its Russian operations adds to the legal woes of the Frankfurt-based bank, which has been battered by multiple investigations and resignations of top executives. The bank also faces allegations over rigging foreign-exchange rates and violating U.S. sanction laws.
In April, Deutsche Bank entered a record $2.5 billion global settlement with U.S. and U.K. regulators for its role in manipulating London’s inter-bank benchmark rates. Later in June, the bank announced the resignation of its co-chief executive officers Jürgen Fitschen and Anshu Jain.
In October, the bank said it had increased its litigation reserves by 1.2 billion euros ($1.31 billion) to cover the fallout over its Russian operations. The bank also scrapped its dividend, pulled out from 10 countries and announced sweeping job cuts across its operations.
“The sums we’re talking about aren’t peanuts,” Andreas Plaesier, an analyst at M.M. Warburg in Hamburg, told Bloomberg. “If you have several violations across the bank, then it becomes a lot harder to argue these are isolated incidents and that can drive up the fine you have to pay.”