Deutsche Bank Says German Regulator Closes Several Audits

  • Bafin ends probes into lender’s conduct on Monte Paschi, Libor
  • Deutsche Bank still probed for currencies, Russia trades

Deutsche Bank AG said Germany’s financial regulator completed probes into the lender’s conduct on multiple cases including interest rate manipulation, Banca Monte dei Paschi di Siena SpA and the trading of precious metals.

Germany’s Bafin cited changes already implemented and further measures to be taken by Deutsche Bank as reasons for its decision, the Frankfurt-based company said in an e-mailed statement Thursday. The regulator sees no need to take further action against the lender, or former and current members of the management board, the bank said.

“We are pleased that with the closure of these special audits a substantial part of the ongoing supervisory investigations has been concluded,” co-Chief Executive Officer Juergen Fitschen said in the statement. “We take very seriously the findings of these special audits and the deficiencies that have been identified.”

Regulators in the U.S. and U.K. fined Germany’s largest lender a record $2.5 billion in April for rigging interest rates such as Libor, a probe that shook confidence in the global banking industry and led to the departures of senior executives. The bank still faces investigations into allegations it improperly sold mortgage-backed securities and rigged currency rates, as well as probes into whether its internal controls failed to catch $10 billion of transactions that may have moved money out of Russia.

Deutsche Bank has dropped about 33 percent this year after losing 10 percent in 2015.

Bafin said in a May letter that management failed to prevent and adequately address attempted manipulation of benchmark interest rates. The regulator at the time said it doubted that senior managers were unaware of the rigging.

Anshu Jain, the bank’s former co-CEO who oversaw the investment bank when the alleged manipulation attempts took place, stepped down in June to be replaced by John Cryan. The management shake-up that followed has bolstered the management board to 10 members from eight, while the bank scrapped an executive committee that advised the board.

Deutsche Bank’s overhaul of its management board and the departure of senior executives below the board contributed to Bafin’s assessment that the company’s remedial actions were sufficient, said a person with knowledge of the matter, who asked not to be identified because the findings haven’t been publicly disclosed.

Improving Controls

The Frankfurt-based lender said in 2014 that regulators were investigating failures by management to supervise individuals involved in arranging transactions that Italy’s Monte Paschi used to hide losses. The bank also said it had adjusted how it accounted for the deal after uncovering new facts amid an investigation by Bafin.

Prosecutors in Milan earlier this month requested that Deutsche Bank and some of its bankers stand trial for allegedly colluding with Monte Paschi to falsify its accounts, manipulate the market and obstruct authorities. They earlier completed an investigation into two separate derivative contracts arranged with Deutsche Bank and Nomura.

“We have taken many steps to improve our controls and processes and to strengthen the bank’s governance,” said Cryan. “We will continue to work intensively to fulfill the requirements of Bafin and other regulators.”

The bank said it will need to continuously review the effectiveness of the measures.

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