The New York Department of Financial Services' probe of the German bank marks the first Libor investigation for the regulator. Deutsche Bank is currently negotiating a settlement with the U.S. Justice Department, the newspaper said.

Lawsky's department regulates banks with charters in New York as well as foreign banks with branches in the state. He is not investigation other banks, which have already settled with the government, the Financial Times said.

In a little over two years, regulators have looked into more than a dozen banks and brokerages over allegations they manipulated benchmark interest rates such as Libor and Euribor, which are used to price trillions of dollars of financial products from derivatives to mortgages and credit card loans.

(Reporting by Caroline Humer; Editing by Jonathan Oatis)