(11 February 2025 – Spain) Spain’s financial watchdog, the National Securities Market Commission (CNMV), has fined Deutsche Bank €10 million for mis-selling high-risk foreign exchange derivatives to corporate clients.
As reported in the Financial Times, the regulator found the bank guilty of “very serious infringements” under Spanish and EU law, stating that it failed to properly inform clients of the risks, exposing them to significant losses.
As a result, CNMV has imposed one of its largest-ever fines and suspended Deutsche Bank from offering investment advisory services related to these products for a year.
Deutsche Bank has responded, stating: “We have improved our processes and enhanced our controls,” and confirming its intention to appeal the decision.
Germany’s BaFin is also investigating the case, with sources suggesting a further fine may follow. CNMV’s probe revealed that the alleged mis-selling occurred between 2018 and 2021, even after Deutsche Bank launched “Project Teal”, an internal investigation triggered by a whistleblower complaint in 2019.
The derivatives were marketed to small and medium-sized businesses seeking to hedge FX risk, but without proper disclosure of potential losses. Some clients lost millions, with cases of businesses being pushed to the brink of insolvency.
One striking example involved a family-run wholesaler with just €3 million in annual sales, yet sold derivatives covering €19 million in FX exposure over five years.
Deutsche Bank’s internal probe found that employees acted dishonestly, breached EU rules, and exploited weaknesses in risk controls. The fallout led to management changes in Spain and among senior London investment bankers. The bank also paid settlements to affected clients, including a winemaker and a hotel chain.
CNMV’s January 2024 report reiterated that banks must provide clear, balanced, and non-misleading information, particularly when selling complex financial products. The case underscores the ongoing regulatory scrutiny of misconduct in investment banking and the risks of poor client transparency.