Another fine mess for HSBC and Deutsche

THE threat of huge fines cast a shadow over two of the world’s biggest banks yesterday.

Germany’s Deutsche Bank faces a penalty of more than £1bn for rigging Libor interest rates.

The lender, which employs 8,000 staff in Britain, is in talks with regulators in the UK and the US.

It is thought to be braced for the biggest fine so far from the Libor scandal, pipping the £1bn paid by Swiss giant UBS in 2012.

The news came as French prosecutors launched a criminal inquiry into HSBC over allegations that its private Swiss bank helped thousands of wealthy clients evade taxes between 2006 and 2007.

The High Street giant was forced to pay a £725m bail charge to cover potential fines.

Deutsche Bank’s huge settlement is likely to include four watchdogs, including the Financial Conduct Authority, New York’s Department of Financial Services, the US Department of Justice and the Commodity Futures Trading Commission.

An announcement is expected later this month.

Germany’s biggest lender has already paid a £525m fine from the European Commission for allegedly rigging yen Libor and the Euro Interbank Offered Rate, known as Euribor. It is being investigated by the New York Department of Financial Services over allegations it rigged the £2trilliona- day foreign exchange market, and concerns that it breached US sanctions against Iran.

Responding to the potential Libor fine, a Deutsche Bank spokesman said: ‘We continue to work with the authorities.’

Under increasing pressure from regulators over its own banking scandal, HSBC said it would appeal. In a statement it added: ‘The French magistrates’ decision is without legal basis and the bail is unwarranted and excessive.’

A spokesman added that it would ‘defend itself vigorously in any future proceedings’.