Deutsche Bank Error Loses Chat Logs Sought in Libor Probe

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Deutsche Bank Said to Lose Chat Logs Sought in Probe

Deutsche Bank AG is seeking to recover internal electronic chat transcripts that were left out of disclosures to regulators during a probe into interest-rate rigging, according to people briefed on the matter.

The lender told regulators in May that a software glitch caused one of its chat systems to fail to archive files as far back as 2005, according to the people, who asked not to be identified because the recovery process isn’t complete. The New York Department of Financial Services, the state’s banking regulator, is investigating the matter, one of the people said.

Deutsche Bank agreed in April to $2.5 billion in penalties to settle U.S. and U.K. investigations into its role in rigging the London interbank offered rate. The missing chats have the potential to reopen the settlement, said one of the people. Still, in the chats recovered so far, the Frankfurt-based bank hasn’t found any new material information related to the Libor case, said another of the people.

“After we discovered this software defect in one of our internal messaging systems, we reported it to our regulators and are presently working with them to rectify it,” Renee Calabro, a spokeswoman for Deutsche Bank in New York, said in an e-mailed statement. “We have been able to recover a majority of the chats via a back-up system.”

Cryan’s ‘Pain’

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Some regulatory investigations of the bank regarding its role in rate manipulation have yet to conclude and it remains exposed to further regulatory action and civil litigation, the company said in filings published on Thursday.

“This doesn’t feel like it will be enough to really take Deutsche Bank back to square one in the Libor case, but it is a very unwelcome development,” said Ingo Frommen, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart who recommends investors hold the stock. “Cryan, as the new co-CEO, benefits from a certain amount of goodwill from regulators and every issue that now comes up, especially old ones, is a pain he’d rather not have.”

John Cryan, a former chief financial officer of UBS Group AG, who sat on Deutsche Bank’s supervisory board, started as the German bank’s co-chief executive officer this month.

The lapse isn’t the first on Deutsche Bank’s part.

In July 2012, Deutsche Bank accidentally destroyed 482 tapes of telephone calls that were among recordings the U.K. Financial Conduct Authority had ordered the company to preserve, according to the regulator. The bank’s foot-dragging and evasions increased the fine it paid to the FCA by 101 million pounds ($157 million) to a total of 227 million pounds, the FCA said in April.

The Wall Street Journal reported the latest lapse earlier Thursday.

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