Jain Criticized in Absentia as Germany Holds Hearing
Deutsche Bank AG (DBK) co-Chief Executive Officer Anshu Jain is facing criticism from politicians and his own predecessor for a decision not to attend a German hearing on rate rigging today.
Jain stayed away from the discussions about banks’ alleged manipulation of the London Interbank Offered Rate at parliament’s Finance Committee in Berlin. Stephan Leithner, the bank’s head of compliance, went in his place.
“Jain just didn’t want to be associated with the proceedings,” Konrad Becker, an analyst with Merck Fink & Co. in Munich, said by telephone yesterday. “He isn’t the investment bank chief anymore, he’s the CEO. He’s trying to distance himself.”
Regulators from Canada to Switzerland are investigating whether more than a dozen banks including Deutsche Bank, Barclays, UBS AG (UBSN) and Royal Bank of Scotland Plc were colluding to rig Libor, the benchmark for more than $300 trillion of securities, or hiding their true cost of borrowing. Like former Barclays Plc (BARC) CEO Bob Diamond, who resigned after his bank admitted to manipulating the rate, Jain led his firm’s investment bank during the period in question. Deutsche Bank denies any wrongdoing by leading executives.
Banks probably fixed Libor, though regulatory investigations are ongoing, Raimund Roeseler, chief of banking supervision at Germany’s financial regulator BaFin, told lawmakers at the hearing.
Leithner said Deutsche Bank has set aside reserves for possible financial damages related to Libor. “We found misconduct by individual employees but no wrongdoing by any current or former member of the board,” he said, repeating a statement the bank made in July.
The U.S. Justice Department is conducting a criminal probe running in parallel with civil investigations by the U.S. Commodity Futures Trading Commission and the U.K. Financial Services Authority.
Diamond resigned on July 3 after a record 290 million-pound ($460 million) fine by U.S. and U.K. regulators against Barclays. Former Deutsche Bank CEO Josef Ackermann, criticized Jain’s decision not to attend two days ago.
“We’ve never had a hearing where the answers were as anorexic as they were today,” Lothar Binding, lawmaker for the opposition social democrats, said after the hearing. “Banks don’t answer more openly because they’re afraid of damage to their reputation.”
Klaus-Peter Flosbach, legislator for German Chancellor Angela Merkel’s ruling party, said the committee had “never seen so many questions answered in such a short time,” referring to bankers’ refusal to answer certain questions, citing legal reasons.
Dietrich Voigtlaender, CEO of Portigon Financial Services, a portfolio management firm that emerged from WestLB AG when the lender was wound down, also testified along with Hugo Baenziger, former chief risk officer at Deutsche Bank, and Douglas J. Keenan, a mathematician and former Morgan Stanley trader. The session lasted about 90 minutes.
Jain, 49, ran Deutsche Bank’s combined debt and equity sales and trading department from 2004. He was appointed the sole head of the investment bank in 2010 and became co-CEO in June this year.
Jain has sought to promote and defend Deutsche Bank’s role in the finance industry since his appointment, appearing at debates and forums in Berlin with Finance Minister Wolfgang Schaeuble, Foreign Minister Guido Westerwelle and lawmaker Peer Steinbrueck, the social democrat’s candidate to challenge Merkel at next year’s parliamentary elections.
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