Deutsche Bank AG, Germany’s largest lender, is set to pay more than $1.5 billion in fines as global regulators wrap up a probe into interest-rate manipulation, according to a person familiar with the matter.
The lender this month will probably finalize a settlement with US and UK authorities probing how traders colluded to rig the London interbank offered rate and related benchmarks to profit from their own derivatives bets, according to two people, who asked not to be identified because the talks are private. The unit expected to plead is Deutsche Bank Group Services, according to one of the people, Bloomberg reported.
A settlement would remove a key legal threat that has haunted Deutsche Bank co-Chief Executive Officer Anshu Jain since 2012. The Libor scandal has forced at least one CEO, Barclays Plc’s Robert Diamond, to resign and cost banks billions of dollars in penalties. While Deutsche Bank’s fine is set to exceed those paid by any of the other seven banks that have settled with US and UK regulators, analysts said it was in line or only marginally higher than their estimates.
The fine is “manageable and Deutsche Bank will be pleased to get it out of the way,” said Christopher Wheeler, a financial analyst at Atlantic Equities in London. Even so, it’s “seen as a reminder of the bad behavior of the investment bank which is linked to Jain,” the former head of the unit.
Deutsche Bank rose as much as 1.2 percent and was up 0.5 percent to 33.17 euros at 11:45 a.m. in Frankfurt trading. The shares have gained 34 percent this year, while the Bloomberg Europe Banks and Financial Services Index rose 16 percent.
Libor-Rigging
Several banks have been probed for rigging the London interbank offered rate, a key interest rate tied to instruments such as mortgages, student loans and credit cards.
Deutsche Bank, one of more than a dozen Libor-panel banks, is accused of giving false information in response to a daily survey by the British Bankers’ Association, which determined the daily rate for Libor in a variety of currencies, including the Euro, the U.S. dollar and the yen.
Rabobank Groep of the Netherlands, Barclays, UBS Group AG, Lloyds Banking Group Plc and Royal Bank of Scotland Plc have already reached Libor-manipulation settlements.
The penalty said to be under discussion for Deutsche Bank would exceed previous fines. In 2012, UBS was penalized $1.5 billion and its Japanese unit entered a guilty plea. At Barclays, Diamond stepped down as CEO the same year after the London-based lender paid 59.5 million pounds ($87 million) to the UK regulator and $360 million to US authorities.
