Deutsche Bank aims to over­come le­gal woes

The Pak Banker - - COMPANIES/BOSS -

Deutsche Bank, the Ger­man len­der that's paid more than $9.3 bil­lion in fines and set­tle­ments since the fi­nan­cial cri­sis, ex­pects to re­solve the largest of its le­gal is­sues by the third quar­ter of 2016, co-Chief Ex­ec­u­tive Of­fi­cer John Cryan said.

"We can never prom­ise it but hope­fully they'll be be­hind us" by mid-year or the thirdquar­ter, Cryan, 55, said at a con­fer­ence in Frank­furt on Wed­nes­day. "2016 should be the year when we fin­ish the process of tidy­ing up the bank and be 100 per­cent fo­cused on what's most im­por­tant which is our staff en­gag­ing with our cus­tomers." Cryan, who took over from coCEO An­shu Jain in July, is grap­pling with lit­i­ga­tion and in­ves­ti­ga­tions stretch­ing the globe, from probes into its U.S. mort­gage-backed se­cu­ri­ties busi­ness to whether its traders col­luded to ma­nip­u­late cur­rency rates. U.S. and U.K. au­thor­i­ties are also in­ves­ti­gat­ing sus­pected money-laun­der­ing at the len­der's Rus­sian unit, peo­ple fa­mil­iar with the mat­ter have said.

The len­der's le­gal bills have con­trib­uted to in­vestors' con­cerns that Deutsche Bank may strug­gle to pay coupons on its con­tin­gent con­vert­ible bonds, known as Co­Cos. The bank's shares dropped as much as 12 per­cent Feb. 8, and are down 26 per­cent this year, while the cost to in­sure against a de­fault on its sub­or­di­nated debt has more than dou­bled.

In a bid to calm the mar­kets, Deutsche Bank on Feb. 9 pub­lished Cryan's let­ter to staff in which he de­scribed the com­pany as "rock solid," while sig­nal­ing that ris­ing le­gal pro­vi­sions are al­ready ac­counted for in the bank's fi­nan­cial plan. The firm also of­fered buy back about $5.4 bil­lion of se­nior bonds to help re­verse the sell­off. "We weren't force­ful enough to say we ab­so­lutely will make those div­i­dend pay­ments," Cryan said Wed­nes­day. "That set off some ner­vous­ness."

Deutsche Bank is "in­cred­i­bly liq­uid" with an "ab­so­lutely solid" bal­ance sheet, Cryan added on Wed­nes­day. Deutsche Bank has been ac­cused of mis­deeds in­clud­ing vi­o­lat­ing U.S. sanc­tions and rig­ging in­ter­est-rate bench­marks. Cryan pledged last month to re­solve the bank's le­gal bat­tles as part of a wider over­haul plan.

The bank last week said Ger­many's fi­nan­cial reg­u­la­tor, Bafin, com­pleted probes into the len­der's con­duct on mul­ti­ple cases in­clud­ing in­ter­est rate ma­nip­u­la­tion, Banca Monte dei Paschi di Siena SpA and the trad­ing of pre­cious me­tals. Bafin cited changes al­ready im­ple­mented and fur­ther mea­sures to be taken by Deutsche Bank as rea­sons for its de­ci­sion.

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