Bafin imposes a fine on Deutsche Bank

Deutsche Bank headquarters in Frankfurt am Main

The bank wants to accept the fine from the Bafin.

(Photo: dpa)

Frankfurt Deutsche Bank has to pay a fine of EUR 8.66 million for inadequate controls. The background to this are deficiencies in the controls used to determine the Euribor reference interest rate. The bank “temporarily did not have effective preventive systems, controls and strategies”, which it is obliged to under a European regulation to prevent manipulation of the Euribor, the Bafin announced on Wednesday.

Reference interest rates such as the Libor or the Euribor indicate the conditions under which banks lend each other money. Financial transactions with a volume of many hundreds of trillion dollars daily are linked to these reference rates, which means that profits can be made even with small movements.

The bank emphasized that the Bafin’s penalty affects the institute’s internal controls, but that there are no indications that these deficiencies have led to incorrect reporting in the calculation of the Euribor – and thus to a falsification of this reference interest rate. She wants to accept the fine.

Even if this did not lead to a manipulation of the Euribor, the lack of control in determining a reference interest rate is extremely embarrassing for Deutsche Bank: The institute was significantly involved in the manipulation of important reference interest rates such as the Libor and Euribor that was discovered in 2011. For this she has already paid fines of four billion dollars to authorities in the USA, Great Britain and the EU.

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Defects from April 2019 to April 2020

It was probably the most expensive and momentous scandal for the institute, as a result of which numerous top managers had to leave the institute. A former star dealer for the institute was sentenced to prison in London in 2018.

Deutsche Bank also found it uncomfortable when the control deficiencies still existed: the relevant EU regulation, which the bank violated, did not come into force until the beginning of 2018. The deficiencies now punished by the Bafin occurred between April 2019 and April 2020, people familiar with the matter told the Handelsblatt. The bank and the Bafin did not want to comment on this.

The institute emphasized, however, that it had “coordinated and already implemented the first measures to improve its controls with the responsible supervisory authority”. For the bank, it continues to be “top priority to identify and remedy possible weaknesses in the control processes”.

If the Euribor regulation is violated, the Bafin can impose penalties of up to ten percent of the turnover. In the worst case, that would have meant a fine of around two billion euros for Deutsche Bank. Measured against this, the institute got off lightly with EUR 8.66 million.

In April, Bafin criticized money laundering prevention

In the past, Deutsche Bank had to pay heavy fines for deficiencies in its control systems, for example in the area of ​​money laundering prevention. At the beginning of 2017, for example, British and American supervisory authorities fined the institute $ 630 million for having laundered billions of euros through Russian customers.

It was not until April that the Bafin complained about what it saw as slow progress in improving money laundering prevention. She therefore added and extended the mandate of the money laundering special watchdog she appointed at the money house in 2018. The bank changed its money laundering officer shortly afterwards.

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