Date
20 January 2017
Deutsche Bank joint chief executives Anshu Jain (left) and Juergen Fitschen expressed deep regret over the case, but said they are pleased to have resolved it. Photo: Bloomberg
Deutsche Bank joint chief executives Anshu Jain (left) and Juergen Fitschen expressed deep regret over the case, but said they are pleased to have resolved it. Photo: Bloomberg

Deutsche Bank fined record US$2.5 bln over rate manipulation

Deutsche Bank, Germany’s largest lender, was fined by US and British authorities a record US$2.5 billion over the manipulation of benchmark interest rates.

The penalty was the biggest in a seven-year investigation that has shredded the banking industry’s reputation, Reuters reported. 

Total fines imposed on some of the world’s top financial institutions have reached around US$8.5 billion. Twenty-one people face criminal charges.

Regulators have accused Deutsche Bank of obstructing regulators and ordered it to fire seven employees.

Senior staff of the bank were blamed for misleading regulators, failing to be open and cooperative, and prolonging the investigation, the news agency said.

US regulators fined Deutsche Bank US$2.12 billion while UK watchdogs imposed a US$340 million 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).

The Libor is used to price hundreds of trillions of dollars of loans and contracts worldwide.

As part of the settlement, the 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, the report said.

“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.

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