Commerzbank Drops Case Against Bankers Fired Over U.S. Probeby
Bank ends appeals of labor court rulings in sanction case
U.S. regulator asked bank to dismiss staff for violations
Commerzbank AG ended appeals of German labor court rulings that forced the bank to reinstate two employees fired at the request of U.S. authorities.
The lender dropped its filing in one of the cases earlier this month as a hearing scheduled this week approached, Frank Woitaschek, spokesman for the Frankfurt Labor Appeals court, said Tuesday. The bank had already ended the appeal in a second employee’s case, according to Peter Roelz, the lawyer representing the two employees in the appeals.
The two employees were among four dismissed in 2015 as part of the bank’s $1.45 billion settlement with U.S. authorities last year over violations of American laws, including sanctions for doing business with Iran and Sudan. The four won their jobs back after filing wrongful dismissal cases in Frankfurt. Commerzbank appealed three of the rulings and now has dropped two of them. One of the cases is still pending.
Alexander Cordes, a Commerzbank spokesman, said the bank’s policy is not to comment on labor court cases.
Bankers fired over allegations that their wrongdoing cost lenders dearly have sued in various financial hubs.
A Frankfurt labor court in 2013 reinstated four Deutsche Bank AG trader who were dismissed over their roles in submitting Euribor and Swiss Franc Libor rates. Last month, an ex-Citigroup Inc. foreign-exchange trader won a ruling and in March another trader of the bank settled a similar case. A Deutsche Bank trader settled a labor case in London earlier this month.
Germany’s two biggest lenders so far haven’t been successful in convincing labor courts they should be able to get rid of employees they say took part in actions that were subject to global investigations. The banks can’t put the blame on the employees, the judges said.
In the 2013 case of the four traders at Deutsche Bank, the Frankfurt labor court said while there were “indications” that the men wrongfully took derivatives trading positions into account when submitting rates, the lender can’t fire them as it had a working structure allowing the actions. Deutsche Bank "is complaining about a behavior the bank itself only made possible," the judges wrote at the time.
German prosecutors who also looked into the case last month dropped their probe, saying the traders didn’t violate any German laws. The U.K. has charged three of them and asked Germany to extradite them. The men have denied wrongdoing.
In the Commerzbank case, the labor judges voided the dismissals, saying the bank gave in too quickly to demands to fire the four and should have tried to convince the U.S. authorities to let them stay, Handelsblatt reported in January.
The bankers didn’t commit “grave” violations under German law and Commerzbank itself didn’t raise individual allegations against the employees, according to the newspaper. The lender fired them because of concerns that it would otherwise lose its U.S. banking license, according to the report.
New York’s Department of Financial Services, a party to the March 2015 agreement with U.S. authorities, had ordered Commerzbank to hire an independent monitor and fire the four employees. The settlement placed the bank under a three-year period of "good conduct.”
Prosecutors must ask the American court to dismiss charges against the bank by May 2018 if Commerzbank abides by the pact. The U.S. can resume prosecution if Commerzbank violates the agreement’s terms before that date.