U.S., UK Regulators Want Quick Deutsche Bank Libor Settlement: Reports
U.S. and UK regulators are pushing to settle the Deutsche Bank AG Libor case quickly and hope to extract major penalties, although a conclusion is unlikely before 2015, The Wall Street Journal reported, citing unidentified sources.
U.S. prosecutors are also discussing plans to force Deutsche Bank to plead guilty to attempting to manipulate Libor, the interest rate benchmark that underpins trillions of dollars in mortgages, derivatives and consumer credit, the New York Times reported separately, citing legal sources.
Officials have not made a final decision, the New York Times added.
Deutsche Bank is two years into a turnaround plan launched in 2012 that has seen costs fall and operating profit leap, but the threat of further penalties from alleged misconduct has cast a shadow over the share price and management's success claims.
The bank's own investigation has not uncovered any evidence of wrongdoing by senior executives, but did find that “certain employees, acting on their own initiative, engaged in conduct that falls short of the bank's standards,” the bank said in a statement.
The bank originally hoped to clear the decks of legal issues in 2014 but has guided recently that 2015 will likely be the year instead when the majority of investigations are concluded.
Regulators are hoping to convince the bank to pay well into the hundreds of millions of dollars, the Journal said.
The bank is being investigated by the U.S. Commodity Futures Trading Commission and Justice Department and the UK Financial Conduct Authority, the newspaper added.
The bank has set aside 7.8 billion euros ($9.8 billion) in the past two and a half years for fines and settlements and expects to face another 3 billion in costs in 2014.
The litigation reserves are weighing on third-quarter earnings, which benefited from strong retail and investment banking activities, sources familiar with the matter said.
The bank faces a number of investigations that touch on the U.S. mortgage market, foreign exchange and high-frequency trading.
Banks such as BNP Paribas SA and Credit Suisse Group AG paid heavy fines earlier this year for violating the U.S. sanctions.
Deutsche Bank shares were down 1.2 percent at 0812 GMT, one of the biggest falls among European banking peers.