Deutsche Bank fined $2.5 bn for fixing interest rates

23rd April 2015, Comments 0 comments

German banking giant Deutsche Bank will pay $2.51 billion in fines for its role in a vast multi-year conspiracy to rig LIBOR interest rates, US and British authorities said Thursday.

"Deutsche Bank secretly conspired with its competitors to rig the benchmark interest rates at the heart of the global financial system," said US Assistant Attorney General Bill Baer.

"Deutsche Bank's misconduct not only harmed its unsuspecting counterparties, it undermined the integrity and the competitiveness of financial markets everywhere."

The case centers on charges that Deutsche Bank derivatives traders manipulated the London InterBank Offered Rate, used to peg millions of interest rate-sensitive contracts and loans around the world, from at least 2003-2011 to boost their trading positions.

Under the deferred prosecution agreement, Deutsche Bank agreed to plead guilty to a US charge of wire fraud, a criminal offense, in connection with the scam and admitted participating in price-fixing conspiracy with other banks. Deutsche Bank employees defrauded counterparties in emails, telephone calls and electronic chats, the US said.

The $2.51 billion fine is a record for interest-rate manipulation. The largest German bank will pay $1.4 billion in penalties to the Justice Department, $800 million to the US Commodity Futures Trading Commission, $600 million to the New York Department of Financial Services and $344 million to Britain's Financial Conduct Authority.

The settlement agreement allows Deutsche Bank to keep its operating license in the United States.

The Justice Department said the penalty reflected that Deutsche Bank's cooperation with the probe "was often helpful but also fell short in some important respects."

Deutsche Bank co-chief executives Jurgen Fitschen and Anshu Jain expressed regret for the rigging, adding that no current or former member of its management board were found to have known about the misconduct.

"We have disciplined or dismissed individuals involved in the trader misconduct; have substantially strengthened our control teams, procedures and record-keeping; and are conducting a thorough review of the bank's actions in addressing this matter," Fitschen and Jain said in a statement.

The bank said it would book an additional charge of 1.5 billion euros ($1.6 billion) in the first quarter for LIBOR and "other matters".

© 2015 AFP

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