How Deutsche Bank Made Their Loans Disappear

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July 11 (Bloomberg) -- Bloomberg’s Vernon Silver reports on Deutsche Bank’s accounting that obscured risk and the legality of their practice. He speaks on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

The balance sheet?

Using an accounting technique which was completely legal, they were able to make loans on one side of billions of dollars to their clients and to set up structures around them with complementary transactions that took them to a point where they also had a liability towards these clients.

So they were able to take the asset, the liability, and cancel them out.

The result is on the balance sheet were you record your loans there was essentially zero at the end.

Where does this leave deutsche?

There has been considerable concern about their balance sheet for quite some time.

They have been at pains to make sure the market believes there on the right track.

How much damage has been done to the credibility of those as the result?

The question investors and the cantons have talked to have raised.

If we can find this amount of obscuring of lending within the balance sheet, what else is in there, they are asking.

We know from the last quarterly filing that there is almost $500 billion of netted assets that does not show on the balance sheet.

Perfect we legal, but this is about 1/5 of the entire assets of the banks.

Asking questions about proposal.

-- disclosure.

They want the bank to say, we are doing it, it is legal, here is the proper way.

All right.

Thanks for that.

Vernon silver.

This text has been automatically generated. It may not be 100% accurate.


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