Unauthorized bond purchase: German bank threatens new trouble with the ECB

The European Central Bank (ECB) appears to be investigating the opening of proceedings against Deutsche Bank. The supervisory authority accuses the institute of having bought back its own bonds between 2014 and 2017 without their permission. Two persons familiar with the matter have confirmed this to the Reuters news agency.

In the spring of 2014, the bank started to acquire its own subordinated bonds on the market. This is a common process to keep bond trading liquid. However, the procedure must be approved by the authorities since 2014, and that permission was not available to the bank at the time.

Approval was not retroactive

Deutsche Bank and ECB did not comment on the information. According to the "Süddeutsche Zeitung" it is about a volume in the amount of a three-digit million amount. Only at the end of 2014, ie months after the start of the repurchase, did Deutsche Bank ask the ECB for a formal approval.

However, they have ordered to stop the buyback. According to insiders, the ECB will grant approval in 2017, but not retroactively. Therefore, it will now be examined whether an administrative procedure will be opened. However, it is not clear whether a penalty will follow at the end.