BaFin probes lenders Deutsche Bank over Euribor: paper


German regulator BaFin has launched a special probe against four lenders including Deutsche Bank as part of an investigation into possible manipulation of the Europe Interbank Offered Rate (Euribor), the Sueddeutsche Zeitung newspaper reported on Monday.

A special probe is the most severe kind of investigation the regulator can launch against a bank.

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The German regulator is also investigating Portigon AG , Sueddeutsche Zeitung said, without citing sources. Portigon is what remains following the breakup of the bank that used to be known as WestLB.

Officials at Deutsche Bank and BaFin were not available for comment. Portigon officials were also not available for comment.

The special probes were launched after BaFin had asked for information from all German banks involved in setting Euribor rates, Sueddeutsche said.

Euribor and its larger counterpart, Libor, or the London Interbank Offered Rate, are Europe's key gauges of how much banks pay to borrow from their peers and are used to set the prices of swathes of financial products, from Spanish home mortgages to more complex derivatives.

Deutsche Bank is already being subjected to a BaFin special probe in connection with Libor.

Deutsche Bank has said it is cooperating with investigations in the United States and Europe in connection with setting rates between 2005 and 2011.

In July, Reuters reported that several banks under investigation for suspected rigging of Euribor intensified cooperation with EU antitrust regulators in the hope of lower fines.

Earlier this month German bank BayernLB said it has withdrawn from the Euribor panel, effective at the start of 2013, citing "strategic reasons".

More than 40 banks still contribute to the Euribor inter-bank lending rate, but the Euribor-EBF group running it warned recently that more could leave following recent bad publicity.

The daily Libor poll asks banks at what rate they think they will be able to borrow money from each other in 10 major currencies and for 15 borrowing periods ranging from overnight loans to 12 months.

As the credit crisis intensified between 2006 and 2008, allegations started mounting that Libor no longer reflected the real cost banks were paying for funds. Authorities have been examining whether traders tried to influence the rate to profit on bets on the direction it would go.

(Reporting By Edward Taylor; Editing by Matt Driskill)