By Matthias Sobolewski and Edward Taylor
BERLIN/FRANKFURT (Reuters) - Germany's financial regulator has doubts about Deutsche Bank's <DBKGn.DE> internal probe into its role in a global interest rate rigging scandal and will step up its own investigations into the bank, two sources familiar with the matter said.
Regulators across the world are investigating more than a dozen banks and brokerages over allegations they manipulated benchmark interest rates such as Libor and Euribor, which are used to underpin trillions of dollars of financial products from derivatives to mortgages and credit card loans.
While German watchdog Bafin cannot itself impose fines, its input is expected to feed into settlement talks between Deutsche Bank and regulators in the United States and Britain.
Bafin has been reviewing Deutsche Bank's internal findings as part of its own probe and has sent a progress report to Germany's finance ministry, the sources said on Thursday.
This report said that Bafin needed to step up its own investigations into Germany's biggest lender because it disagreed with some aspects of the bank's own conclusions, one of the sources said, without elaborating.
Deutsche Bank's internal investigation is being led by its legal department with the support of external counsel.
Three people with knowledge of the matter told Reuters in February that Deutsche Bank's top managers were unlikely to be sacked as a result of the internal probe.
Deutsche Bank, Bafin and the Bundesbank, which is also responsible for banking supervision, declined to comment.
There is no formal deadline for Bafin to deliver a final report. It is too early to forecast the outcome of the intensified probe, the second source said.
One of the two sources said that at this stage there was no sign of a "nasty surprise," without elaborating.
Deutsche Bank has already made provisions for possible fines in the Libor case, sources close to the bank have told Reuters.
Analysts see the likely exposure at less than 500 million euros ($654 million). Swiss bank UBS <UBSN.VX> agreed in December to pay $1.5 billion to settle charges of rigging benchmark interest rates.
Deutsche Bank has suspended or dismissed seven employees involved in setting benchmark rates as part of its own investigations.
Bafin is working with the Bundesbank and accountant Ernst & Young <ERNY.UL> on its probe, delving into suspected misconduct by individual traders and their counterparts at other banks.
In February, it said a key issue was whether banks reacted quickly enough once problems became known, and whether they reached the right conclusions.
(Additional reporting by Arno Schuetze; Editing by Maria Sheahan and Mark Potter)