Deutsche Bank Said to Face Bafin Call Over Libor Rigging

Deutsche Bank AG (DBK) may be told as soon as this month by the German financial regulator to improve its controls to prevent a repeat of attempts to manipulate benchmark interest rates, according to a person familiar with the matter.

Bafin is finalizing its first report into the rigging of Libor and similar benchmarks and will submit it to the Frankfurt-based lender as soon as this month, said the person, who asked not to be identified because the review isn’t public. Bafin will present its findings to Deutsche Bank management, telling them to adhere to standards set by the regulator, the person said.

The report is part of a broader investigation by Bafin into allegations that traders at Deutsche Bank tried to manipulate rates. Under its rules, Bafin cannot publish the findings or disclose actions it takes on individual banks without the lender’s consent. The regulator will oversee how the measures are implemented.

The move may bring the bank closer to facing fines from U.S., U.K. and EU regulators, who are waiting on the German watchdog to finish their reviews. Barclays Plc (BARC), UBS AG (UBSN) and Royal Bank of Scotland Group Plc have paid a total of about $2.5 billion in fines for colluding to rig benchmark interest rates for profit or to mask their true cost of borrowing.

Trader Oversight

Bafin is in the final stages of reviewing the report, compiled by the Bundesbank, Germany’s central bank, on whether Deutsche Bank’s systems and controls failed to prevent traders from trying to manipulate rates to benefit their own trades, the person said. The Bundesbank investigators looked at who at the bank had oversight of the traders reporting rates, whether rate reporting procedures required two people to look at submissions, and how transparent the processes were, according to the person.

Deutsche Bank shares gained 0.4 percent closing at 34.30 euros in Frankfurt.

Bafin’s press office declined to comment.

Christian Streckert, a spokesman for Deutsche Bank, declined to comment on the report. He said the bank is cooperating with regulatory investigations and conducting its own review into the allegations.

“As per the current status of investigations, we can say that no current or former member of the management board had any inappropriate involvement in the interbank offered rates matters under review,” Streckert said. The bank “has also found that certain employees, acting on their own initiative, engaged in conduct that falls short of the bank’s standards, and action has been taken accordingly.”

Bafin has also commissioned an auditor to look into possible wrongdoing by Deutsche Bank staff and management. That inquiry, testing findings of the lender’s own internal investigation, is ongoing and will yield a separate report, the person said.

To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net

To contact the editor responsible for this story: Lindsay Fortado at lfortado@bloomberg.net

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