It's no laughing matter.
Der Spiegel reports that Deutsche Bank says the benchmark LIBOR rate was rigged by individual rogue traders. But co-CEO Anshu Jain carries some responsibility because he organized the investment banking operation in a way that caused conflicts of interest and allowed the fraud to flourish.
When Anshu Jain had finished his first annual results press conference as co-CEO of Deutsche Bank last Thursday, he tried his hand at a bit of irony. When asked what he thought of German draft legislation that could force financial institutions to separate their commercial and investment banking operations, he said the plan was comprehensive and gave no cause for celebration. 'In other words, made in Germany', Jain said with a broad grin.
Eight months after taking the helm of the bank, Jain, who hails from India, has settled in to life in Germany. But plans afoot by banking supervisors are unlikely to be a laughing matter for him. Germany's federal financial supervisory authority BaFin is about to complete an investigation into the role Deutsche Bank played in the LIBOR (London Interbank Offered Rate) rate-rigging scandal.
Deutsche Bank could face drastic financial sanctions from the US and Britain. Settlements recently reached between government agencies and Barclays, and with Switzerland's UBS, could give some indication of what is in store for the German bank. The Swiss had to pay some $1.5bn in fines and issue a public admission of guilt.
Deutsche Bank is not as deeply embroiled in the scandal as UBS, where over 100 employees were more or less involved in the rigging. Even critics of Deutsche Bank admit that there are 'light-years of difference'. Nevertheless, the costs for the Frankfurt-based bank could add up to billions of euros. The EU Commission has filed several antitrust suits against LIBOR banks, and a large number of investors are suing for damages - with more possible lawsuits looming in the future.
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