BaFin probes Deutsche Bank over Euribor as well as Libor: paper

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January 28, 2013 4:35 PM EST

The German banking regulator BaFin has launched a special probe against four lenders including Deutsche Bank AG 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.

The German regulator is also investigating Portigon AG , Sueddeutsche Zeitung said, without citing sources. Portigon is what remains following the breakup of the financial giant 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.

Earlier this month German landesbank BayernLB said it has withdrawn from the EURIBOR panel, effective at the start of 2013, citing "strategic reasons".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

(Reporting By Edward Taylor; Editing by Matt Driskill)

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