Deutsche Bank Settles With Ex-Banker in Monte Paschi Lawsuit

Deutsche Bank AG has settled a lawsuit with Michele Foresti, a former manager who claimed he was wrongfully blamed for the Monte dei Paschi accounting scandal, the first of six similar cases to be resolved.

“The parties have now resolved on a confidential basis all of the claims and allegations that Mr. Foresti has previously made against Deutsche Bank and its personnel,” a spokesperson for the lender said, declining to comment further. A spokesman for Withers, a U.K. law firm representing the ex-banker, confirmed the deal without disclosing the terms.

Foresti and the other managers had sued Deutsche Bank in London over allegations they were wrongfully implicated in an audit report into the Monte Paschi affair. The group also includes Michele Faissola, former head of asset and wealth management, and Ivor Scott Dunbar, ex co-head of global capital markets. Matteo Angelo Vaghi, ex-head of Italian Sales, and former account manager Marco Veroni also sued in the U.K.

Foresti, an 18-year veteran of Deutsche bank, was hired by Bank of America in March 2014 but couldn’t start his job due to regulatory issues. Foresti’s position was held up because Deutsche Bank withheld clearance with the U.K. Financial Conduct Authority, Bloomberg reported at the time.

“It is normal course of business to evaluate whether a settlement that removes legal uncertainty is in the bank’s best interest,” a spokesman Deutsche Bank said. “That evaluation is specific to the particular case at hand,” he added. “It would be misguided to attempt to apply a read-across from this settlement to other separate cases.”

Dario Schiraldi, a former top manager from Deutsche Bank’s asset and wealth management division, filed a case in Frankfurt claiming around €152 million ($179 million) over the issue.

At the center of the claims is an audit report commissioned by Deutsche Bank in 2013 reviewing the accounting of repo deals that the German lender did with Monte dei Paschi.

At the time, current CEO Christian Sewing was put in charge of the report, people familiar with the case previously said. The ex-staffers argued that the review wasn’t handled neutrally and unfairly pinned the blame on them, even claiming they manipulated the relevant market prices.

In the original Italian criminal case, Monte dei Paschi managers were accused of colluding with Deutsche Bank staff to hide losses at the Italian lender by using complex derivative trades, leading to a misrepresentation of the firm’s finances between 2008 and 2012.

The ex-Deutsche Bank managers were also charged with market manipulation — all six were ultimately acquitted by a Milan appeals court in 2022 because there was no case to answer. The settlement was earlier reported by Handelsblatt.

Top photo: The Deutsche Bank AG headquarters in Frankfurt. Photographer: Alex Kraus/Bloomberg.