Deutsche Bank-Kirch, EU Card Fee Caps, Bonus: Compliance

Deutsche Bank AG will pay about 925 million euros ($1.27 billion) to settle a 12-year-old dispute with the heirs of Leo Kirch over the collapse of his media group, according to two people familiar with the matter.

Deutsche Bank agreed to pay 775 million euros plus interest and costs, the company said in an e-mailed statement yesterday. Those items total 110 million euros and 40 million euros, said the people, who asked not to be identified as the information isn’t public. Kirch’s family sought more than 3.3 billion euros in lawsuits against the lender.

The media entrepreneur, who died in 2011, and his heirs fought Deutsche Bank after former Chief Executive Officer Rolf Breuer questioned his creditworthiness in a 2002 Bloomberg TV interview. The media group filed for insolvency in the following months. The dispute led to dozens of lawsuits and to criminal investigations.

Juergen Fitschen and Anshu Jain, co-chief executive officers of Deutsche Bank, said yesterday in a statement that the settlement “is in the best interests of our stakeholders.”

The settlement, after existing provisions, will shrink profit in the fourth quarter of last year by about 350 million euros, Deutsche Bank said in the statement.

The related criminal probe into the lender’s executives isn’t affected by the agreement.

Compliance Policy

EU Parliament Economy Committee Backs Credit/Debit Card Fee Caps

The European Union’s plans to cap cross-border credit and debit card fees were approved by the European Parliament’s economic and monetary affairs committee.

The full parliament must still vote on draft rules and agree on them with EU governments.

The parliament committee backed a 0.3 percent cap for credit card transactions and the suggested cap of 0.2 percent of transactions, or 7 euro cents (10 U.S. cents), for debit card payments.

Banks face caps on the card fees they can collect on Visa Europe Ltd. and MasterCard Inc. transactions as the EU seeks to reduce charges imposed on retailers by 6 billion euros ($8 billion) a year.

Michel Barnier, the EU’s financial-services chief, called July 24 for levies to be capped on concerns of anti-competitive conditions.

Compliance Action

Banks Flouting Bonus Rules in Denmark Set to Be Named by FSA

Denmark’s financial watchdog will begin naming banks that fail to comply with bonus restrictions amid a crackdown on incentive programs found to have helped fuel a property bubble.

Spot checks into bonus practices, which begin this year, come as police look into how remuneration structures at Danske Bank A/S influenced employees accused of fixing bond prices in 2009. The public prosecutor’s office is investigating whether the prospect of bonuses led employees at Denmark’s biggest bank to rig prices and inflate trading results.

The bank said Feb. 7 that it’s cooperating fully with the authorities. Danske has suspended the six employees being probed. Denmark’s FSA will “disclose inspection reports” covering compensation practices at individual banks, the regulator said yesterday.

Danske may be able to reclaim bonuses paid to the employees being investigated.

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Constancio Says ECB Bank Review Won’t Jumpstart Credit by Itself

European Central Bank Vice President Vitor Constancio said the ECB’s review of banks’ balance sheets won’t jumpstart the flow of credit on its own.

The ECB’s Comprehensive Assessment of banks will dispel doubts about banks’ balance sheets, Constancio said at a conference in Brussels yesterday.

Declining credit is predominantly due to a lack of demand in Europe, Constancio said, who attributed modest growth in Europe to “many other reasons.”

European exports will suffer from deceleration of growth in emerging countries, he said.

Comings and Goings

Deutsche Bank Tokyo Salesman Charged With Bribery Leaves Company

Shigeru Echigo, a Deutsche Bank AG salesman in Tokyo who was charged with bribery for spending too much on entertaining clients, left the firm.

Echigo, whose pension fund sales department at the bank’s Japanese securities unit was closed in December after his arrest, is no longer an employee, said Takayuki Inoue, a bank spokesman, declining to comment further on his departure.

Deutsche Securities Inc. became the first brokerage to be penalized in Japan for breaching client entertainment rules after regulators found that staff provided “substantial benefits” to pension fund officials.

Echigo couldn’t be reached for comment.

Deutsche Securities closed Echigo’s department, which had four other sales staff, and vowed to cut pay for five senior executives and increase compliance staff.

The case is 2967/Wa/2013, Tokyo District Court.

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