Executive Intelligence Review
Subscribe to EIR


Deutsche Bank Investigated for Destabilizing Italy in 2011

Dec. 12, 2017 (EIRNS)—According to a leak in the weekly L’Espresso, prosecutors in Milan have some evidence that Deutsche Bank was part of a political destabilization of Italy in 2011. The screws on Italy were tightened after an agreement between German Chancellor Merkel and French President Sarkozy in 2010, and led to a removal of the democratically legitimate government in Rome and its replacement with Mario Monti.

At their meeting in Deauville in October 2010, Merkel and Sarkozy decided that

"in case of default by a EU member country, no bailout would be implemented if creditors do not agree first to lose a large part of their investments."

As a consequence, Italian and Spanish sovereign bonds went into free fall.

Eventually, Deutsche Bank sold almost its entire stock of Italian bonds, over €7 billion. However, the bank made it known only on July 26, with the publication of its Q2 report. But investigators have discovered that between the end of the second quarter, June 30, and the publication of the report on July 26, Deutsche Bank had secretly (over the counter) re-purchased a large chunk of Italian bonds at low prices. Deutsche Bank had speculated through transactions on bonds and on credit default swaps.

The July 26 announcement that Deutsche Bank had dumped Italian bonds came a few days, after Merkel had made known that she had called the Italian Prime Minister and demanded an urgent budget cut and debt reduction. The political effect was destabilizing. The Financial Times announced "the dramatic signal of a run by international investors on the third Eurozone economy" (retranslated from L’Espresso.

The coup de grâce against the Italian government came from the famous Draghi-Trichet letter to the Italian government, demanding measures such as a constitutional reform, labor reforms, etc.

It will be difficult to get a court verdict, L’Espresso acknowledges, but regardless of the result of the Milan trial, "Deutsche Bank operations as reconstructed by prosecutors could re-open political polemics on large banks and European rules."

Indeed, on a television interview on Sunday Dec. 10, former Finance Minister Giulio Tremonti, showing the L’Espresso article, was particularly aggressive in exposing the 2011 "coup d’éàtat" and calling the European Central Bank's letter "politically criminal." The removal of the Italian government in 2011 was a coup run "by Brussels, Frankfurt, and the Italian State Presidency," Tremonti said.