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Deutsche Bank AG, JPMorgan Chase & Co, UBS AG and Hypo Real Estate Holding AG’s Depfa Bank Plc unit were charged with fraud linked to the sale of derivatives to the City of Milan.

Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan today. The banks allegedly misled the city over swaps that adjusted interest payments on ¤1.7 billion ($2.3 billion) of bonds sold in 2005.

Prosecutors across Italy are investigating banks as local and national government agencies face potential losses of ¤2.5 billion on derivatives, lawyers say. The Milan probe may also affect cases as far away as the US, where securities firms have faced charges for price-fixing and bid-rigging in the sale of derivatives to municipalities, though not for fraud, according to former regulator Christopher “Kit” Taylor.

“This case could have repercussions over here if the trial showed deliberate intent,” said Taylor, a former executive director of the Municipal Securities Rulemaking Board, the national regulator of the municipal-bond market. “What happened in Europe was the continuation of a pattern in the US.”

JPMorgan is “vigorously” defending its position against the charges, the New York-based firm said in a statement. “The employees involved in the transactions acted with the highest degree of professionalism and entirely appropriately.”

UBS and “its exponents are confident that they will be able to demonstrate, in the course of the trial, that no criminal plot was conceived,” the Zurich-based bank said in a separate statement.

Deutsche Bank believes it will be cleared of the charges and that its employees acted with integrity, according to a statement from the Frankfurt-based bank. Hypo Real Estate Holding said in a statement that neither Depfa Bank nor its employees “violated any law or regulation.”

Giacomo Beretta, the City of Milan’s current finance director, said in a statement that the municipality is “pleased about the speed at which the case is moving ahead, and the judiciary’s attention to detail in the case.”

Prosecutor Robledo alleges the London units of the four banks misled Milan on the economic advantage of a financing package that included the swaps and that they earned ¤101 million in hidden fees.

He also claims the banks violated UK securities rules by failing to inform Milan in writing that for the swap deal the city was a counterparty to the lenders rather than a customer.

(BS)

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Deutsche Bank AG, Germany’s biggest bank, paid euro 2.2 billion ($3 billion) in bonuses last year to employees who can conduct “high-risk” business.

The lender’s “risk-taker population,” or “employees who can create high-risk positions,” received euro 921 million in cash bonuses, euro 961 million in deferred equity awards and euro 317 million in restricted incentive awards, according to the company’s compensation report published today. The bank, which declined to identify how many employees are defined as risk takers, gave the group euro 367 million in fixed pay.

Chief Executive Officer Josef Ackermann’s pay rose more than sixfold last year to euro 9.55 million after the Frankfurt-based company returned to profit, helped by a rebound in trading. The bank paid its 77,000 employees compensation and benefits of euro 11.3 billion, or an average of euro 147,000 per worker, down 14 per cent from 2007, it said today.

The risk-taker population included 28 business heads in the group executive committee and management board members and managing directors at selected subsidiaries, the bank said.

Ackermann, 62, has warned of a regulatory and political “backlash” if his industry doesn’t change its pay practices. Deutsche Bank is deferring more bonuses, aligning rewards with longer-term success and enabling pay to be clawed back to bring the bank’s compensation policy into line with the guidelines of the Group of 20 nations.

Governments in Europe and the US are facing pressure to limit bankers’ compensation after some financial firms were bailed out by taxpayers. Deutsche Bank didn’t need state aid during the credit crisis.

The German bank hasn’t published overall bonus payments to bank employees.

(BS)