Fines tally nears £6bn as Deutsche penalised
FINANCIAL firms around the world have now paid nearly £6bn in fines for rigging interest rates, following a record penalty for Deutsche Bank.
germany’s largest bank yesterday became the eighth group to be penalised for manipulating the Libor and euribor inter-bank lending rates.
us and British regulators slapped a record £1.7bn fine on the company following a seven-year investigation.
It took the total fines imposed on some of the world’s leading financial institutions for rigging the interest rate benchmarks to £5.6bn. Twenty- one traders and brokers face criminal charges.
Most staff involved in Deutsche’s rate-rigging were in London, and it also took place in Frankfurt, New York and Tokyo.
rogue traders at Deutsche Bank sent messages on internet chat rooms to colleagues, as well as staff at other lenders, persuading them to manipulate interest rates.
Messages included: ‘Could we pls have a low 6mth fix today old bean?’ on another occasion, one replied: ‘sure dude, where wld you like it mate?’
separately in New York, a trader wrote: ‘strap on a pair and jack up the 3M [3month Libor].’
other firms to be fined include royal Bank of scotland, Barclays, Lloyds, UBS, rabobank, ICAP and Martin Brokers.
experts said a shift in the culture in the City is needed to avoid further scandals.
Mark Taylor, professor of finance at Warwick Business school and a former official at the Bank of england and the International Monetary Fund, said: ‘This is a major blow for Deutsche Bank both financially and for its reputation, but the size of the fine is an important step in shifting the culture of the financial sector.
‘The Libor fixing scandal revealed that a major reference interest rate in the world’s leading financial centre was being manipulated to create bank profits and take money from investors - including our pension funds. Deutsche Bank compounded its crime by not being fully co- operative in the ensuing investigation.
‘A shift in culture in the City is necessary in order to ensure that something similar doesn’t happen in another guise. Imposing heavy penalties - together with the accompa- nying adverse publicity - is one way of shifting that culture.’
The Financial Conduct Authority said the misconduct at Deutsche involved at least 29 staff and accused the bank of having inadequate systems and controls. It said Deutsche failed to provide timely and accurate information and misled the UK watchdog. georgina Philippou, acting director of enforcement and market oversight at the FCA, said: ‘This case stands out for the seriousness and duration of the breaches by Deutsche Bank – something reflected in the size of today’s fine. one division at Deutsche Bank had a culture of generating profits without proper regard to the integrity of the market.
‘This wasn’t limited to a few individuals but, on certain desks, it appeared deeply ingrained. Deutsche Bank’s failings were compounded by them repeatedly misleading us. The bank took far too long to produce vital documents and it moved far too slowly to fix relevant systems and controls. This case shows how seriously we view a failure to co-operate with our investigations and our determination to take action against firms where we see wrongdoing.’
Last year, six banks were fined £2.6bn for alleged manipulation of the foreign exchange markets.