[ 2015-04-24 ]

Deutsche Bank pays record $2.5bn fine for Libor manipulation
Deutsche Bank has paid a record $2.5bn to
authorities in the US and UK to settle allegations
that it manipulated the Libor benchmark rate, a
key interbank borrowing rate that underpins as
much as $350tn of debt worldwide, from student
loans to complex financial instruments.

In addition to forking out the largest total fine
to date in the worldwide investigation into the
Libor scandal, Germany’s biggest bank was
ordered to dismiss seven employees, while a London
subsidiary, DB Group Services, is pleading guilty
to US criminal wire fraud charges.

The fines come at a critical juncture for Deutsche
as it prepares to present a key strategic plan to
its supervisory board on Friday designed to cement
its position as Europe’s leading investment
bank.

The Libor scandal has claimed several
executives’ scalps at institutions that have
settled with authorities: Bob Diamond, Barclays’
former chief executive, was forced out shortly
after that bank’s fine.

While Anshu Jain, Deutsche’s co-chief executive,
was head of its investment bank during the alleged
Libor rigging, the bank said he had been cleared
of any wrongdoing and Mr Jain himself has told
colleagues he had no intention of standing down.

However, some legal experts suggested the bank’s
top echelons had been tainted by the scandal.
“It seems hard to imagine a situation today
where such widescale misconduct could be carried
out without the executive management knowing or at
least turning a blind eye,” said Tony Brown,
managing director of Bivonas Law.

Deutsche has paid out £227m to the UK’s
Financial Conduct Authority, $775m to the US
Department of Justice, $800m to the Commodity
Futures Trading Commission and $600m to the New
York Department of Financial Services. It is the
first time that the DFS, led by the combative
Benjamin Lawsky, has been involved in a Libor
settlement.

Deutsche — the seventh financial institution to
be fined by the US and the UK in their seven-year
investigation — admitted in Thursday’s
settlement that its employees had rigged yen Libor
and the Brussels and Tokyo equivalents, Euribor
and Tibor, to benefit their trading book and those
of traders at other banks.

At least 29 Deutsche employees, including a senior
manager and mid-level managers, traders and rate
submitters in Frankfurt, New York, London and
Tokyo, were involved, the FCA said.

Deutsche drew particular criticism and was handed
the second-largest fine in the FCA’s history for
misleading the British watchdog during the
investigation.

“Deutsche Bank’s failings were compounded by
them repeatedly misleading us. The bank took far
too long to produce vital documents and it moved
far too slowly to fix relevant systems and
controls,” said Georgina Philippou, acting
director of enforcement.

Source - FT

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