Finance ministry raises pressure on Deutsche Bank to clean up

Germany's finance ministry piled pressure on Deutsche Bank to reform its corporate culture yesterday, adding its voice to that of the country's industry watchdog which said the bank had not done enough to clean up its act despite several scandals.

A strongly worded report by Bafin, Germany's financial regulator, was leaked to German media at the weekend suggesting Deutsche Bank's co-chief executives Anshu Jain and Juergen Fitschen have made little impression with their efforts so far to restore the bank's reputation.

Bafin and other regulators are investigating Deutsche and more than a dozen other banks and brokerages over allegations they manipulated benchmark interest rates such as Libor and Euribor, which are used to benchmark trillions of dollars of financial products from derivatives to mortgages and credit card loans.

Separately, Deutsche faces several other lawsuits and investigations including a decade-old case led by heirs of the Kirch media empire and charges by the EU that it was among 13 investment banks that blocked access to the lucrative credit derivatives market. Bafin is approaching the end of its investigation into the interest rate accusations and has concluded, according to the report published in German weekly Der Spiegel, that Deutsche has not done enough to investigate and clear up the incident.

Finance Ministry spokesman Martin Kotthause said yesterday: "Bafin should and will vigorously pursue all accusations when it comes to the issue of the manipulation of interest rates."

“We attach great importance to ensuring that this gets truly cleared up fully and completely.”

Bafin’s leaked report also said it was not clear “whether senior management was involved in or had knowledge of possible manipulation attempts”, and pointed to “grave organisational shortcomings”.

Bafin declined to comment on the report. – (Reuters)