Deutsche Bank Bans Fixed Income Chat Rooms Amid ProbesNicholas Comfort
Deutsche Bank AG, Europe’s biggest investment bank by revenue, barred multi-party chat rooms at its fixed-income and currency trading businesses as regulators continued punishing banks for alleged rate-rigging.
The ban for employees working in fixed income took effect this week, Michael Golden, a London-based spokesman for the company, said by telephone today. Similar measures were taken in foreign exchange in February, he said.
Regulators are targeting traders’ electronic messages, using them as evidence of wrongdoing in their investigations into the manipulation of benchmark interest rates and foreign-exchange markets. UBS AG, Switzerland’s biggest bank, said last week that it is banning the use of multibank and social chat rooms at its investment-banking division.
The European Union’s antitrust regulator fined Deutsche Bank 725 million euros ($986 million) today for allegedly colluding to rig markets for financial derivatives denominated in euros and yen and based on the London and euro interbank offered rates. The fines for Deutsche Bank and five other firms totaled 1.7 billion euros, the largest-ever EU cartel penalties. Europe’s biggest lenders have racked up more than $77 billion in legal costs since the financial crisis.
Deutsche Bank dropped 0.9 percent to 34.35 euros at 12:13 p.m. in Frankfurt, declining for the the third day and valuing the company at 35 billion euros.
JPMorgan Chase & Co., the biggest U.S. bank by assets, is weighing whether to bar chat rooms for communication with other firms, a person with knowledge of the matter said last month.
In February, Deutsche Bank fired five Frankfurt-based traders, who counted submitting rates among their responsibilities, for inappropriate communication with colleagues. Four of the men sued for wrongful dismissal and returned to work last month. It also fired two traders at the end of 2011 in connection with rates.
The bank said last year that its own internal investigation of alleged attempts to rig rates cleared current and former management board members of wrongdoing.
Bloomberg News reported in June that foreign currency traders at some banks said they shared information about their positions through instant messages, executed their own trades before client orders and sought to manipulate the benchmark WM/Reuters rates.
Deutsche Bank increased its reserves set aside for legal costs by 1.2 billion euros to 4.1 billion euros at the end of September from three months earlier. The company won’t have to make any “material” addition to reserves for today’s fine, it said in an e-mailed statement.