Deutsche Bank hit with €2.3bn fine for rigging Libor

Deutsche Bank was ordered to pay a record $2.5 billion (€2.3bn) fine and fire seven employees to settle US and UK investigations into its role in rigging Libor.

Deutsche Bank must terminate six London employees and one in Frankfurt who engaged in wrongful conduct, according to Thursday’s settlements.

While the New York Department of Financial Services didn't identify them by name, one is a managing director, four are directors and two vice presidents. A UK unit agreed to plead guilty to a wire- fraud charge as well.

"Deutsche Bank employees engaged in a widespread effort to manipulate benchmark interest rates for financial gain," New York Department of Financial Services superintendent Benjamin Lawsky said in a statement.

“We must remember that markets do not just manipulate themselves: it takes deliberate wrongdoing by individuals.”

The penalty is the biggest yet in the interest-rate rigging scandal and eclipses that paid by UBS. The agreements, detailing repeated misconduct by employees as well as the bank's own foot-dragging in dealing with investigators, deal a set-back to co-chief executives Anshu Jain and Juergen Fitschen as they prepare to announce their plan to overhaul

“We deeply regret this matter,” Mr Jain and Mr Fitschen said in an e-mailed statement. “This agreement marks another step in addressing the past.”

The Frankfurt-based bank said the investigations found no current or former management-board member to have been involved in or aware of the misconduct.

Deutsche Bank traders regularly asked rate submitters to make submissions that would benefit their trading positions, according to the Justice Department. On September 7th, 2006, a London desk head asked a Barclays trader to help him get a low rate for Euribor, which is the euro equivalent of Libor.

“I’m begging u, don’t forget me... pleassssssssssssssseeeeeeeeee... I’m on my knees...” the e-mail said, according to DFS.

In addition, Deutsche Bank gave an “unacceptably slow and ineffective response” to investigators’ requests, and misled to regulators on occasion, significantly slowing the case down, the UK Financial Conduct Authority said in its announcement.

29 individuals

The misconduct involved at least 29 Deutsche Bank individuals including managers, traders and submitters, primarily based in London but also in Frankfurt, Tokyo and New York, the FCA said.

In an effort to manipulate Libor, Deutsche Bank traders coordinated their Libor submissions with dealers at other firms, including at Barclays, BNP Paribas, Citigroup, Merrill Lynch, Societe Generale and UBS, according the the settlements.

"Deutsche Bank's failings were compounded by them repeatedly misleading us," Georgina Philippou, the FCA's acting director of enforcement and market oversight, said.

“The bank took far too long to produce vital documents and it moved far too slowly to fix relevant systems and controls.”

Bloomberg