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Report: ECB may probe Deutsche over alleged illegal bond buying

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Report: ECB may probe Deutsche over alleged illegal bond buying

The ECB is weighing a potential formal investigation into allegations that Deutsche Bank AG repurchased some its own additional Tier 1 and additional Tier 2 securities without authorization, Reuters reported, citing two people familiar with the matter.

The German lender could face a fine if the central bank finds that it breached regulations. Deutsche Bank is understood to have asked for approval in 2014 for the purchase of the bonds, but was denied the request, according to the sources. Despite the rejection, the bank continued to repurchase the securities to create a liquid market, one of the sources noted.

The ECB, which is in a fact-finding phase on the matter, eventually authorized Deutsche Bank to buy the bonds in 2017, however, the ruling was not retroactive, according to the report.

The news was first reported by local publication Süddeutsche Zeitung.