The fine is so large because Deutsche Bank also misled the regulator, which could have hampered its investigation.
Georgina Philippou, acting director of enforcement and market oversight, said:
“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.
“This case shows how seriously we view a failure to cooperate with our investigations and our determination to take action against firms where we see wrongdoing.”
Between January 2005 and December 2010, trading desks at Deutsche Bank manipulated its Libor and Euribor submissions across all major currencies.
This 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.
This misconduct went unchecked because of Deutsche Bank’s inadequate systems and controls, which it did not put in place even after being informed that there was a risk of misconduct. Deutsche Bank also had defective systems to support the audit and investigation of misconduct by traders. For example, the Bank’s systems for identifying and recording traders’ telephone calls and for tracing trading books to individual traders were inadequate. As a result, Deutsche Bank took over two years to identify and produce all relevant audio recordings requested by the FCA.
Deutsche Bank gave the FCA misleading information about its ability to provide a report commissioned by the German regulator, BaFin. Deutsche Bank did not disclose the report to the FCA and claimed that BaFin had prevented it from being shared when this was untrue.
In addition, Deutsche Bank provided the FCA with a false attestation that stated that its systems and controls in relation to Libor were adequate, despite the complete lack of systems and controls.
The FCA’s investigation was made more difficult and was delayed because Deutsche Bank failed to provide timely, accurate and complete information. In one instance, Deutsche Bank in error destroyed 482 tapes of telephone calls, which fell within the scope of an FCA notice requiring their preservation. Deutsche Bank also provided inaccurate information to the regulator about whether other records existed.
Deutsche Bank settled at an early stage of the investigation, qualifying for a 30% discount on its fine. Without the discount, the fine would have been £324 million.
Today, the Commodities Futures Trading Commission has imposed a financial penalty on Deutsche Bank of $800 million, the US Department of Justice has imposed a financial penalty of $775 million and the New York Department of Financial Services has imposed a fine of $600 million. The fine imposed by the FCA is approximately $340 million.
