Deutsche Bank’s top supervisors are critical of how the lender handled an internal investigation into mis-selling of derivatives, raising questions about its findings.
The European Central Bank and German regulator BaFin have told Germany’s largest bank that the investigation, known as Project Teal, took too long, wasn’t broad enough, and was too slow to take remedial action, according to people familiar with the matter who asked not to be identified discussing private information.
The regulators could impose sanctions such as a fine or take other enforcement actions at some point as a result, one person said.
Representatives for the ECB, BaFin and Deutsche Bank declined to comment on the news, first reported by the Financial Times.
The rebuke is the latest in a long series of complaints that regulators have directed at the lender over a perceived failure to sufficiently improve controls and compliance systems. Chief executive Christian Sewing has repeatedly pledged to fix the gaps and thrown additional money at the issue, causing him to miss cost targets.
Shares of the lender dropped 1.6 per cent at 12.29pm in Frankfurt, paring gains this year to about 10 per cent.
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Project Teal had for more than two years examined dozens of cases where some employees sold foreign exchange derivatives to small and medium-sized Spanish companies, even amid concerns the products were too complex for those clients.
The investigation, which recently concluded, has led to settlements with clients worth tens of millions of euros and resulted in the departure of several employees, Bloomberg previously reported.
Fewer than a dozen Deutsche Bank employees have been sanctioned as a result of Project Teal, which targeted the London desk and some parts of the lender’s Spanish operations.
The lender also looked at deals and controls beyond the involved London desk. Even though it didn’t find evidence that similar misconduct occurred elsewhere, some wider controls and procedures were changed as a result. — Bloomberg
