Draft:Project Santorini

== Project Santorini == In 2008, Deutsche Bank executed a structured €2.2 billion financing with Monte dei Paschi di Siena (MPS), the world's oldest bank, in a transaction known internally as "Santorini." The deal involved an accounting technique called netting that removed approximately €11 billion of loan exposure from Deutsche Bank's balance sheet across a wider portfolio of similar transactions.^[1] In 2010, Sewing, then serving as Deutsche Bank's chief credit officer, was part of a committee that approved a similar €1.5 billion enhanced repo transaction with UniCredit. Documents seen by the Financial Times show that Sewing was directly involved in obtaining executive board approval for the trade; an internal email from October 2010 records Sewing telling colleagues: "Unicredito was approved by the Board."^[2]Following intensifying pressure from the US Federal Reserve and Germany's BaFin regarding its balance sheet treatment, Deutsche Bank's Management Board resolved in October 2013 to restate the Santorini transactions andapproximately 36 similar transactions, reclassifying them from loans to derivatives. The bank attributed the restatement to the purported discovery of new facts — specifically that the deal team had concealed certain features of the transactions from Deutsche Bank's Finance division. BaFin responded by describing the bank's explanation as "totally implausible."^[2] Deutsche Bank commissioned an internal Group Audit investigation. Sewing, who had served as Head of Group Audit since June 2013, oversaw the investigation. According to the Financial Times, Deutsche Bank did not disclose Sewing's prior involvement in the UniCredit transaction — one of the deals examined by the audit — either in the audit report or in a subsequent presentation to the Italian central bank. Deutsche Bank said no potential conflict of interest existed, and that Sewing's audit did not address the aspects of the transactions he had been involved in during his earlier role.^[2] The resulting Group Audit Report concluded that the deal team had failed to inform Deutsche Bank's Finance division about certain features of the transactions and that Deutsche Bank's proprietary indices had been manipulated to benefit the client. In May 2014, Deutsche Bank presented the Group Audit findings to the Bank of Italy. Under Italian law, the Bank of Italy was legally obligated to transmit potential crimes toprosecutors.^[1] In January 2017, while Italian criminal proceedings were ongoing, DeutscheBank's lawyers filed a submission in a parallel civil case before the Tribunal of Florence in which Freshfields, acting for Deutsche Bank, formally stated that the Group Audit Report "does not in any way represent the bank's opinion on the matter, but simply that of the drafting office," and that its "methodologies and conclusions were criticised and largely disregarded." This position was not communicated to the Milan criminal court or the Italian defendants at the time.^[3] In November 2019, six former Deutsche Bank employees were convicted by the Milan Court of First Instance in connection with the transactions, receiving sentences of up to four years and eight months' imprisonment for abetting false accounting and market manipulation, although none served jail time pending appeal.^[4] In May 2022, the Milan Court of Appeal acquitted all six completely, finding that the prosecution had been substantially built on Deutsche Bank's internal audit report, which the court described as "flawed, opaque, and the product of a piloted investigation." The court found that the real reasons for the 2013 restatement related to Deutsche Bank's desire to manage the balance sheet consequences of regulatory scrutiny, and not to any failure by the deal team.^[1] The Italian Supreme Court confirmed the acquittals in October 2023.^[5]Civil proceedings arising from the matter are ongoing. In April 2024, a civil claim was filed at the Landgericht Frankfurt (case 2-19 O 153/24) by former employee Dario Schiraldi seeking €152 million in damages, alleging the criminal proceedings caused by Deutsche Bank's audit destroyed his career.^[6] In October 2025, Quinn Emanuel Urquhart & Sullivan filed a further claim in the High Court of Justice in London (case CL-2025-000448) on behalf of four other former employees — including Michele Faissola, a former senior executive — seeking in excess of £700 million. The claim, which names Sewing as a defendant alongside the bank, alleges unlawful means conspiracy and contends that Deutsche Bank constructed a false narrative to shield senior management and protect its balance sheet from regulatory scrutiny, causing the wrongful prosecution of the deal team.^[7][8] In February 2026, Deutsche Bank reached a confidential settlement with one former employee in connection with claims arising from the Group Audit investigation, on undisclosed terms.^[9] The Frankfurt civil trial is scheduled for September 2026.Deutsche Bank has denied all allegations, stating it considers the claims to be "entirely without merit" and that it will defend itself robustly.^[4]

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