Commerzbank Loses Fight With Banker Fired Amid U.S. Probe

  • ‘Lars C.’ was fired at request of New York bank regulator
  • Appeals court says Commerzbank had ignored issue for years

Commerzbank AG must reinstate a banker fired at the request of a New York regulator as part of a $1.45 billion settlement with U.S. authorities after the lender lost an appeal in a Frankfurt court.

The banker didn’t violate U.S. embargoes on transactions in Iran, Presiding Judge Charlotte Gieraths said when delivering the ruling Wednesday. Commerzbank had known about some problems, which included the failure to follow compliance procedures, since 2008, but had never disciplined him before letting him go in 2015, the judge said.

The man, who can be identified only as Lars C., is one of more than two dozen bankers that New York’s Department of Financial Services had sought to have terminated during several settlements over issues ranging from benchmark manipulation to violations of U.S. trading bans. In the Commerzbank case, the DFS asked the bank to fire four employees.

"We also take from the language in the consent order that the New York banking regulator accepted that Commerzbank can keep the employee if a German court finds he cannot be dismissed," Gieraths said Wednesday. "That shows that the bank wasn’t under absolute pressure to get him out."

Remaining Case

When Commerzbank dismissed the bankers in 2015, all four won their jobs back after filing wrongful dismissal cases in Frankfurt. The bank appealed three of the rulings, but had dropped two of them, leaving Lars C.’s case as the sole remaining dispute.

Commerzbank tried to argue in all four cases that it was under pressure from the regulator and had no other way out. Labor courts can accept that argument only in extreme cases, when a company’s existence is at risk, said Thomas Griebe, a Hamburg-based employment lawyer who isn’t involved in the case. As the settlement with DFS discussed transferring the men to new posts, that road was blocked, he said.

"As an employer, you have to resist the pressure and that’s what the lender didn’t do here," he said. "The bank simply turned the other cheek and said it will work out somehow."

Alexander Cordes, a Commerzbank spokesman, said the bank’s policy is not to comment on labor court cases. The court today granted Commerzbank the right to appeal Wednesday’s ruling once more.

Settlement Talks

Christian Kaiser, a lawyer for Lars C., said that he would have preferred to settle the case and talks may continue as his client is scheduled to meet with Commerzbank representatives Thursday.

Commerzbank lawyers said at the hearing it had earlier offered a settlement payment of 125,000 euros ($138,600), but Lars C. had asked for 1 million euros. Kaiser declined to comment on the amounts under discussion.

Before issuing the ruling, the court halted the hearing to allow the parties to discuss a resolution, but these talks also failed.

About 90 percent of dismissal disputes are settled, even if the worker wins reinstatement in court, according to Griebe, the employment lawyer. Reinstatement rulings don’t necessarily mean all workers really go back.

"In others countries it may be easier to fire someone, usually against some payment," Griebe said. “Here in Germany are making a detour via a court case but in the end, we will get to the same result."

The case is: Hess. LAG, 18 Sa 1498/15.

Before it's here, it's on the Bloomberg Terminal.