LONDON/NEW YORK: US and British authorities fined Deutsche Bank $2.5bn, accused Germany’s largest lender of obstructing regulators and ordered it to fire seven employees in the eighth global settlement of alleged benchmark interest rate rigging.
The penalty — the biggest in a seven-year investigation that has shredded the banking industry’s reputation — takes the total fines imposed on some of the world’s top financial institutions to around $8.5bn. Twenty-one people face criminal charges.
Slamming Germany’s largest lender for “cultural failings”, regulators squarely blamed senior staff for misleading them, failing to be open and cooperative, and prolonging the investigation.
US regulators fined Deutsche Bank $2.12bn and UK watchdogs imposed a $340m penalty for its role in a scam that ran from around 2003 to 2010 to fix rates such as the London Interbank Offered Rate (Libor) — used to price hundreds of trillions of dollars of loans and contracts worldwide. As part of the settlement, Deutsche Bank’s London-based subsidiary pleaded guilty to criminal wire fraud and the parent group entered into a deferred prosecution agreement to settle US wire fraud and antitrust charges. US authorities said independent monitors would be installed.
New York’s banking regulator Benjamin Lawsky ordered the bank to take steps to fire six London-based employees, including a managing director, four directors and a vice president, plus a Frankfurt-based vice president.
Britain’s Financial Conduct Authority (FCA) said at least 29 Deutsche Bank employees including managers, traders and submitters were part of the scam based mainly in London but also in Frankfurt, Tokyo and New York. It also accused senior bank employees of recklessness by wrongly claiming the bank’s German regulator BaFin had prevented it from sharing a crucial report with the UK watchdog.
During the investigation, the German bank also destroyed 482 tapes of telephone calls by mistake — and provided inaccurate information about whether other records existed. “This case stands out for the seriousness and duration of the breaches by Deutsche Bank — something reflected in the size of today’s fine,” said Georgina Philippou, the FCA’s acting director of enforcement and market oversight. The bank’s joint Chief Executives Juergen Fitschen and Anshu Jain said no current or former management board member had been found to have been involved in or aware of the misconduct. “We deeply regret this matter but are pleased to have resolved it,” they said in a joint statement.
US and UK authorities published pages of traders’ requests for rate changes.
In one, a Deutsche London desk head tried to persuade a Barclays banker to lower rates with a message: “I’m begging u, don’t forget me… pleassssssssseeeeeeee… I’m on my knees…” Bank staff also bragged about the power of Deutsche Bank’s Frankfurt and London offices.
In an email to the head of Deutsche Bank’s Global Finance Unit, one wrote: “HAVE U SEEN THE 3MK FIXING TODAY? THAT WAS AN EXCELLENT CONCERTED ACTION FFT/LDN. CHEERS.”
Deutsche Bank’s settlement dwarfs the previous $1.5bn record demanded in 2012 from Switzerland’s UBS. Two former UBS traders have been criminally charged and its Japanese unit has pleaded guilty to US wire fraud charges.Reuters
