Deutsche Bank
The headquarters of Deutsche Bank are pictured in Frankfurt. (Reuters)

Germany's Deutsche Bank is facing another legal hurdle as prosecutors are probing its co-CEO Juergen Fitschen in a lawsuit over the collapse of the Kirch media empire.

Prosecutors in Munich said they are investigating Fitschen in connection with a decade-old lawsuit brought by the heirs of late media mogul Leo Kirch, accusing the bank of damaging the family business.

Leo Kirch had claimed that the bank's former CEO Rolf Breuer triggered his group's collapse after he questioned the company's creditworthiness in a 2002 interview. Deutsche Bank and its officials denied the claims.

The lawsuit has been dragged through the courts for about a decade. In 2012, a Munich judge found the bank partially liable for Kirch's demise and said Kirch suffered damages ranging from €120m to €1.5bn due to the bank. Subsequently, the bank has asked Germany's top civil court to review the ruling.

Officials will check whether Fitschen gave misleading evidence to a court in the lawsuit. Former Deutsche Bank CEOs Rolf Breuer and Josef Ackermann, former chairman Clemens Boersig and former board member Tessen von Heydebreck are already facing probes over their testimony in the lawsuit.

Deutsche Bank, which earlier extended Fitschen's contract as co-CEO until 2017, said in a statement that he would be cleared from the lawsuit.

"The bank is absolutely convinced that this suspicion will prove to be unfounded," it said.

Rising Legal Costs

The German bank is already facing a number of legal hurdles, including a probe into whether it manipulated the benchmark Libor rates.

In the third quarter of 2013, the bank set aside €1.2bn to cover its legal costs that resulted in a significant decline in its quarterly profit. At the end of the quarter, the company had legal provisions amounting to €4.1bn.

"We expect the litigation environment to continue to be challenging," the bank told investors, anticipating further increase in legal costs.

The bank was earlier sued by Fannie Mae along with eight other banks for a total of more than $800m, in a case accusing them of misrepresentation while selling mortgage-backed securities to the US mortgage company.

The bank is yet to negotiate a settlement with regulators over allegations of Libor rigging.

In June last year, Barclays became the first bank to settle with US and UK authorities for the manipulation of Libor. Subsequently, RBS and UBS negotiated a settlement with regulators.

Along with several Deutsche Bank employees, Fitschen is being investigated on suspicion of tax evasion, money laundering and unjust trading in carbon emission permits.