Deutsche Bank will pay more than $2.5 billion to settle charges by U.S., U.K. and New York state authorities that it manipulated the London interbank offered rate for the U.S. dollar, yen, pound and Swiss franc, and the euro interbank offered rate interest rate benchmarks.
The Commodity Futures Trading Commission will receive $800 million in its settlement with Deutsche Bank — the largest fine in CFTC history, the agency said in a news release issued Thursday.
The bank pleaded guilty to a criminal charge of wire fraud from the U.S. Department of Justice and will pay a $775 million penalty. In addition, the U.K.'s Financial Conduct Authority imposed a penalty of £226.8 million ($339 million), and the New York State Department of Financial Services will get $600 million, the agencies announced in separate news releases.
“For years, employees at Deutsche Bank illegally manipulated interest rates around the globe … in the hopes of fraudulently moving the market to generate profits for their traders at the expense of the bank's counterparties,” Assistant U.S. Attorney General Leslie Caldwell said in a Justice Department news release Thursday.
Georgina Philippou, the FCA's acting director of enforcement and market oversight, said in that agency's news release: “This case stands out for the seriousness and duration of the breaches by Deutsche Bank,” adding “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.”
Deutsche Bank is the sixth major financial institution to settle with U.S. and U.K authorities over charges of LIBOR manipulation. The others are Barclays, UBS, Royal Bank of Scotland, Rabobank and Lloyds Banking Group.
Deutsche Bank officials “have disciplined or dismissed individuals involved in the trader misconduct; substantially strengthened our control teams, procedures and record keeping; and are conducting a thorough review of the bank's actions in addressing this matter,” Jurgen Fitschen and Anshu Jain, co-CEOs of Deutsche Bank, said in a news release from the bank.
Deutsche Bank expects to report about €1.5 billion ($1.62 billion) in litigation costs in the first quarter as a result of the settlements, the news release said.
Officials at Deutsche Bank could not be immediately reached for further comment.