Amid the LIBOR rigging scandal, attention is zeroing in on Germany’s Deutsche Bank AG (ETR:DBK) (NYSE:DB) (FRA:DBK). Analysts from Morgan Stanley (NYSE:MS) have assessed the potential penalty for banks accused of manipulating the interest rate, concluding that Deutsche would have to pay the highest cost – up to 1.04 billion Dollars. The calculation is very speculative, especially against the backdrop that Deutsche will receive the status of a prosecution witness, according to media reports. Its cooperation in the investigation of the scandal will probably allow it to escape with a lighter penalty.

On Sunday, the German weekly Der Spiegel reported that the bank’s application under the leniency programme of the EU and Switzerland has been approved, but that this does not impy the bank was admitting to be guilty. Under the EU’s leniency programmes, a company may even receive complete immunity if it shares crucial evidence of concerted practice with the anti-trust authorities.

According to Reuters, Germany’s own financial regulator, the BaFin, has initiated a “special investigation” against Deutsche Bank, a probe that is more severe than usual BaFin investigations. The time frame the investigators look at is between 2005 and 2011. Two Deutsche Bank employees have already been suspended due to the allegations, according to industry insiders.

A number of international banks have been accused of manipulating the LIBOR (London Inter-Bank Offered Rate) in order to hide their actual refinancing costs and increase their profits. For LIBOR, a panel of banks sets a borrowing rate each day, indicating what they would pay to borrow dollars for a certain time frame. The average of the submitted estimates is then fixed and determines what companies and consumers around the world pay for loans and receive for their savings. Serving as a benchmark for financial instruments, it determines the flow of billions of dollars around the world each year.

The LIBOR setting process has been criticised for giving banks an incentive to lie, since the profit of the banks involved is tightly linked to the rate. Moreover, the fact that each bank’s individual submission is published has probably inclined weak banks to be dishonest about their actual capacity of borrowing.

At the beginning of July, U.K.’s Barclays PLC (LON:BARC) (NYSE:BCS) Bank’s chief executive Bob Diamond resigned as a result of public outrage following details about how Barclay employees had nonchalantly asked their colleagues to falsify LIBOR submissions in order to raise profits.

It looks like more heads will roll as time goes on.