Deutsche to pay $220m over Libor probe
BBC, 25 October 2017
Deutsche has already paid billions to settle
investigations of interest rate rigging. The bank
has now agreed to pay another $220m (£150m)
to resolve a US investigation into its
manipulation of interest rates. It is the latest
settlement stemming from banks' involvement
in the rigging of the benchmark Libor rate.
The sum is more than twice the $100m British
bank Barclays agreed to pay last year to end a
similar probe.
It comes on top of a $2.5bn fine US and UK
regulators levied against Deutsche back in 2015,
also over rate fixing. The latest settlement was
announced by top attorneys in New York and
California, investigating interest rate rigging on
behalf of 45 states.
The probe found that Deutsche Bank defrauded
government entities and charities by making
false misleading submissions to set benchmark
rates, including Libor, and trying to influence
submission by other banks. The aim was to
move the rates to benefit their internal trading
positions.
The misconduct started as early as 2005 and
continued through the global financial crisis.
Libor, which is set by leading financial
institutions through regular submissions of
inter-bank rates, influences the rates used for
borrowing on credit cards, mortgages, student
loans and other transactions. Charities and
government entities were defrauded of millions
because of these activities. Those defrauded
groups will be eligible for about $213m from
the settlement, with the remainder going to pay
legal fees.
"We will not tolerate fraudulent, manipulative
or collusive conduct that interferes with or
undermines confidence in our financial
markets," said Mr Schneiderman, New York
Attorney General.
"Large financial institutions, like all other
market participants, have to abide by the rules."
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Deutsche said the penalty resolves its final
inquiry from US regulators.
The US regulators said their investigation of
other banks continues.
June 2015: Deutsche Bank bosses resign in the wake of
Libor scandal. co-CEOs, Fitschen (left) and Jain have paid
the price for angering major shareholders, at scandal-hit
European banking giant, Deutsche Bank (BBC / AP)
Deutsche Bank in record $2.5bn fine
over interest rate manipulation BBC, 2015
Deutsche Bank has been fined $2.5 billion
(£1.66bn) by US and UK regulators for trying to
manipulate interest rates ($2.1bn by US
regulators, and £227m by the UK's Financial
Conduct Authority). The fine relates to the
German bank’s manipulation of the Libor and
Euribor inter-bank rates.
It is a record penalty for such misconduct
because Deutsche tried to mislead regulators
and could have hampered investigators. The
bank said it "deeply regrets" the matter.
Deutsche said in a statement that it had
"disciplined or dismissed individuals" involved
and tightened governance controls. However,
US regulators have demanded the dismissal of a
further seven senior individuals still employed.
Deeply ingrained
The Financial Foresight Authority’s (FCA)
director of enforcement and market oversight,
said in a statement: "This case stands out for the
seriousness and duration of the breaches by
Deutsche Bank - something reflected in the size
of today's fine.
"One division at Deutsche Bank had a culture of
generating profits without proper regard to the
integrity of the market. This wasn't limited to a
few individuals but, on certain desks, it
appeared deeply ingrained."
"Deutsche Bank's failings were compounded by
them repeatedly misleading us. The bank took
far too long to produce vital documents and it
moved far too slowly to fix relevant systems
and controls," she said.
The FCA said that in one instance, Deutsche in
error destroyed 482 tapes of telephone calls that
should have been kept. "Deutsche Bank also
provided inaccurate information to the regulator
about whether other records existed".
The misconduct involved at least 29 Deutsche
Bank individuals, including managers and
traders, based in London, Frankfurt, Tokyo and
New York. It took place between 2005 and
2009.
Fundamental
Libor and Euribor are benchmark interest rates,
influencing the setting of other rates. They are
used as a barometer to measure the health of the
banking system and as a gauge of market
expectation for future central bank interest rates.
The FCA said they "are fundamental to the
operation of both UK and international financial
markets".
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Kobe Steel scandal deepens over quality
of products used in cars and aircraft
Guardian, 2017
Japanese company admits it falsified data, with
Nissan, Ford, Toyota, Honda, Mazda and
Subaru among its clients.
Japan’s third-biggest steelmaker, Kobe Steel, is
embroiled in a deepening scandal over the
quality of products including aluminium and
copper used in cars, aircraft, space rockets and
defence equipment.
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On Wednesday, the company said it had found
one case of falsified data on iron ore powder –
mainly used in vehicle parts such as gears – that
had been shipped to a customer. It follows
Kobe’s admission at the weekend that it had
falsified figures about the strength and
durability of its aluminium and copper products,
which are used in the transport and defence
industries.
Kobe’s shares plummeted 18% after the iron ore
admission, which brought the company’s stock-
market losses since the scandal broke to $1.6bn
(£1.2bn). It is examining other possible data
manipulations going back a decade.
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Toyota, one of its customers, described it as a
“grave issue”.
Kobe’s customers – the firm said more than 200
were affected – are rushing to check the safety
of their products. The company supplies
materials to carmakers Ford, Toyota, Honda,
Mazda and Subaru as well as aircraft-makers
Boeing and Mitsubishi Heavy Industries.
Hitachi said trains exported to the UK were
affected, but the trains had not started operating
yet.
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