Deutsche Bank to bear heavy fine on the Libor case

By | April 27, 2015

Today, Deutsche Bank announced a fix of its banking operations, after being struck with a fine summing to $2.5 billion over alleged interest rate manipulation for about $2.4 billion last week.

Deutsche Bank

New York’s department of Financial Services also may install a monitor at the bank to oversee its compliance with the settlements to be announced as soon as today according to the person, whose details remain confidential.

Deutsche is a famous German bank which has been functioning successful for years.¬†Jurgen Fitschen and Anshu Jain, the co-chief executive officers of the bank said, “Our strategy review process was thorough and rigorous. We consulted key stakeholders and carefully evaluated different models. As a result of our strategy review, we are convinced that pursuing a forced client-centric business model is right choice for us. This business model, which is unique to Deutsche Bank, will get us closer to our roots.”

The Frankfurt-based firm said in couple of days it will log 1.5 billion Euros in litigation costs in the first quarter. Despite of the largest ever fine for breached interest-rate policies, the bank is expecting a profit for the first quarter and near-record revenue. A settlement would probe the legal threat and the quitting of Anshu Jain’s three-year as co-chief executive officer.

Dirk Becker, a Frankfurt-based analyst at Kepler Cheuvreux who recommends investors buy the lender’s shares¬† said, “It looks like Deutsche Bank must have had an excellent quarter in term of underlying earnings.” He also added, Litigation charges are not a surprise. The question is how much more litigation costs will be coming.” The bank rose 0.4% to 31.55 Euros at 11:00am in Frankfurt trading, valuing the company at 45.5 billion euros. The share value of the company has increased 26% this year, outgrowing the 14% advance of the 45-company Bloomberg Europe Banks & Financial Services Index.

Renee Calabro, a spokesperson from Deutsche Bank in New York said, “We continue to work with the authorities that are reviewing interbank offered rates matters.”

The company earning is scheduled to be released on April 29th. The penalty would top UBS Group AG’s $1.5 billion settlement to be ranked as the biggest levied in the long-running, industry wide investigation into supporting of interest-rate standards counting the London interbank offered rate. More than 10 firms have already paid a combined $6.5 billion since its first deal with Barclays Plc in June 2012.