A Glimpse At Deutsche's Riskless EUR68 Million DV01 Libor "Bet"

Tyler Durden's picture

At the height of the financial crisis in 2008, Deutsche Bank made some extraordinarily large bets. As the WSJ reports, documents uncovered from the Libor rate manipulation investigation show huge outsized bets that would swing EUR68 million on a 1bps shift in the Libor rate that they have since been charged with manipulating. Sure enough, with regards the risk (which was large enough to be brought to management's attention), officials "dismissed those concerns because the bank could influence the rates they were betting on."

The bets (which made the bank at least $654 million) were a series of steepening trades (as opposed to outright positions) which were implicitly highly leveraged to provide the most bang for their manipulated and un-capitalized buck (and perhaps explains the fact that Deutsche had to hide a $12 billion loss during this period in order to avoid a government bailout) in what was a remarkably volatile time for these rates.


Given this scale of trade, it is evidently clear that risk control was entirely ignored (as these 'pairs' trades were not even included in the bank's Value-at-Risk calculations) and the comfort with such a 'bet-it-all-on-double-0' strategy implies everyone was in on the Libor manipulation.

As part of its cooperation with investigators, Deutsche Bank still is checking all the trades for any suspicious signs. Suspicious signs indeed... but another serious glimpse at the reality of the past (and today's - cough London Whale cough) hidden over-levered reality in banks.


Source: WSJ

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GetZeeGold's picture



See our agent Jon Corzine for our riskless market opportunities.

ball-and-chain's picture

You hit the nail right on the head.

D. Bank is just another criminal enterprise with the right connections.

It's allowed to commit fraud with the blessing of the global power players.

What a crock of shit.


MillionDollarBoner_'s picture

So what?!?

It's not like anyone lost out on this trade or anything...


AccreditedEYE's picture

This is the firepower you are up against if you are shorting this market. They own what moves prices thus they move prices in their favor. They own regulators so regulators don't enforce anything. They have MSM out with a constant flow of negative headlines to keep the unknowing scared and worried about tomorrow. Just BUY and let them make money for you. Take profits from time to time and buy more gold.

Cognitive Dissonance's picture

The funny thing about risk is that it appears to be negligible until the Wal-Mart tractor trailer runs you over in the middle of the cross walk.

fonzannoon's picture

Where I live half the people work for these banks that launder money for the Iranian government when they are not creating weapons of financial destruction and betting on them and losing and then begging for bailouts. The other half of the people go to work for the federal gubbamint and beat the ever loving shit out of the taxpayer to support their 100k salaries/pensions and free healthcare.

When asked what the problem is each one of them point to the other one. Meanwhile the few people who do not work for either side lay bludgeoned, unconscious in the corner. In between arguments they both walk over and kick that corpse and see if there are a few dollars left in his pocket they can still grab.

francis_sawyer's picture

'Trekkies' point the finger at 'Birders' while 'Birders' point finger at 'Trekkies'... All the rest are exonerated by birthright...

Cognitive Dissonance's picture

No silly. He's talking about the good old US of A.

AccreditedEYE's picture

I was being facetious CD. Hope you been doin' well.

Carl Spackler's picture

I was thinking Grand Cayman Island...at lest eveyone there knows why there are global banks doing business there.


fuu's picture

Check the shoes! Maybe the hem of his goodwill coat.

jover's picture

they got us to backstop those bets, no problem there.

GetZeeGold's picture



Ann Barnhardt is gonna be out of there. She's not gonna pay.

fonzannoon's picture

Anyone watching crude? Strong dollar my anus.

GolfHatesMe's picture

Initials RK on the Approved Order ticket

buzzsaw99's picture

Someone was defrauded of $654M. Hopefully it was just another bank (or other large scumbag corporation).

Cosimo de Medici's picture

Wasn't that Boaz' penultimate trade for Deutsche?  The next one, not quite as good.

monopoly's picture

And of course, nobody goes to jail. No one gets indicted and all fines are paid by share holders as corporate executives continue to fill their personal coffers with more ill begotten gains. 

How do these parasites sleep at night or feel good about themselves. The destruction they continue to wrought on this planet carries on unabated, no matter what the shyster Liesman or Cramer spout out of their idiotic foul mouths.

There is NO justice!

monopoly's picture

And I am sure this will make us all feel warm and fuzzy like...


.Buffett: Bank Risk No Longer Threatens U.S. Economy


Will it ever end?

GetZeeGold's picture



I'll only feel better when Uncle Warren is long gone.

news printer's picture


""Just imagine a visit to the casino, which has little changed the rules. When rolled black, those who bet on Black wins as many, those who put on the red and lose everything. But when I rolled the red, the casino gives half of what losing bet on black. And when he falls to zero, the players lose all the money they made ??and those on the pile. What would happen in the casino. Players would have figured that the casino can earn huge money, he earns twice as much, and lose only half the bet. Provided that does not fall to zero."



"This option gives you the right to sell a financial asset (stocks, bonds , raw materials , currency) at a predetermined price. The holder of this option can rest easy when share prices are falling, because if you use the option and sale of shares at a favorable price agreed in the option. That is acted Greenspan for many years. As share prices fell, immediately lowered interest rates to credit became cheap and to be able to speculate on the markets on an even larger scale. That's what created the bubble in the property market and there was a crash of 2008-2009."


Joe Davola's picture

It seems the thorough bank stress tests of the time somehow missed this.

LeisureSmith's picture

News that you are profiting from crimes brings more profit. Jebus.

Fizzywig's picture

Whew, crisis averted!  That was a close one.  Fraud on.

“The banks will not get this country in trouble, I guarantee it,”  -Warren Buffett


Curtis LeMay's picture


Roll Tylers, roll...