Deutsche Bank faces US$1.5 bln LIBOR fine

April 10, 2015 08:49
Deutsche Bank is in talks with regulators in the United States and Britain to settle allegations it rigged LIBOR. An agreement could be reached by the end of April. Photo: Bloomberg

Deutsche Bank could face more than US$1.5 billion in penalties over allegations it manipulated the London interbank offered rate (LIBOR).

Any such fine would be the largest on a bank accused of rigging the benchmark borrowing rate, the Financial Times reported Friday, citing people familiar with the case.

The German lender is in talks with regulators in the United States and Britain to settle the allegations and an agreement could be reached by the end of April, the report said.

But the terms have not been finalised, which means the fine could go higher, the people added. A Deutsche Bank subsidiary could also plead guilty as part of the deal.

The New York Times first reported the settlement amount.

One relief for Deutsche Bank is that the agreement is likely to include four agencies investigating the bank in the long-running scandal, including New York’s Department of Financial Services.

It had been unclear whether the DFS, run by Benjamin Lawsky, would be part of a settlement that would also include the Department of Justice, the Commodity Futures Trading Commission and the UK’s Financial Conduct Authority.

In some past cases with banks, DFS has reached separate settlements from other authorities, a scenario Deutsche Bank had hoped to avoid. The Financial Times first reported in March that DFS was investigating Deutsche Bank in the agency’s first LIBOR probe.

“We continue to work with the authorities that are reviewing interbank offered rates matters,” the bank said in a statement.

Deutsche Bank has already paid a US$633 million fine imposed by the European Commission for allegedly rigging yen LIBOR and the euro LIBOR.

The largest Libor penalty has been paid by UBS, which was fined US$1.5 billion by US, British and Swiss authorities.

DFS is also investigating the bank for potential manipulation of foreign exchange rates, including whether algorithms on its trading platform were used to rig transactions, people familiar with the case said.

It is also looking into whether Deutsche Bank violated US sanctions because of its alleged past dealings with businesses in Iran.

The Federal Reserve has also pressured the German lender to improve its regulatory compliance programs. A US subsidiary failed its first annual capital test in March.

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