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BaFin names Deutsche Bank executives in rate probe

BaFin names Deutsche Bank executives in rate probe

(20 July 2015 – Germany) German regulator the Federal Financial Supervisory Authority (BaFin) has singled out Deutsche Bank AG senior executives, saying management failed to prevent and adequately address attempted manipulation of benchmark interest rates.

BaFin indicated it had doubts that former Deutsche co-chief executive Anshu Jain as well as his key lieutenants, Michele Faissola and Alan Cloete were unaware of the rate rigging.

Jain oversaw the investment bank when the manipulation attempts took place.

Regulators in the United States and the United Kingdom fined Deutsche Bank a record US$2.5 billion (A$3.37 billion) in April for its role in the interest-rate rigging scandal that shook confidence in the global banking industry.

The UK Financial Conduct Authority said the bank gave an “unacceptably slow and ineffective response” to investigators’ requests and misled regulators.

Deutsche Bank said it has rectified several of the control-related issues in BaFin’s report.

BaFin found “major misconduct” by Deutsche Bank traders and “major failures” on the part of members of the Frankfurt-based company’s management board and group executive committee.

While there are no indications that current or former management board members knew about manipulation, “a business and organizational environment was created which was favorable to incorrect interbank offered rate submissions or even made them possible in the first place,” BaFin wrote in the letter to the bank.

Faissola, former head of the rates business, now leads the asset and wealth-management unit. Cloete was head of foreign-exchange trading.

The bank said in May that Cloete would leave the company “in the near future.”

Deutsche maintains that Faissola was never responsible for interbank offered rate submissions and the report includes statements that are taken out of context.

“It would be unwarranted to infer conclusions about the conduct of the bank or any individuals at this stage, especially because their detailed responses are submitted privately out of respect for the regulatory process,” the bank said.

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