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Deutsche Bank agrees to pay 2.5bn fine for manipulating the LIBOR rate

Friday, April 24th 2015 - 08:25 UTC
Full article 2 comments
NYDFS Superintendent Lawsky said staff at the bank had engaged in a “widespread effort to manipulate benchmark interest rates for financial gain.” NYDFS Superintendent Lawsky said staff at the bank had engaged in a “widespread effort to manipulate benchmark interest rates for financial gain.”
The 2.5bn penalty includes Deutsche Bank paying 340 million to UK's Financial Conduct Authority (FCA), while the rest is paid to various US agencies. The 2.5bn penalty includes Deutsche Bank paying 340 million to UK's Financial Conduct Authority (FCA), while the rest is paid to various US agencies.
Under the settlement deal, Deutsche Bank has entered into a deferred prosecution agreement to settle charges it rigged the rates. Under the settlement deal, Deutsche Bank has entered into a deferred prosecution agreement to settle charges it rigged the rates.

The New York State Department of Financial Services (NYDFS) announced Thursday that Deutsche Bank had agreed to pay 2.5 billion (2.3 billion Euros) to US and UK authorities as part of a legal settlement over the bank's role in manipulating the London Interbank Offered Rate (Libor).

 Germany's biggest lender would also terminate and ban individual employees who engaged in misconduct, NYDFS said in a statement. In addition, the bank would set up an independent monitor for interest rate manipulation as part of the deal.

NYDFS Superintendent Benjamin M. Lawsky said staff at the bank had engaged in a “widespread effort to manipulate benchmark interest rates for financial gain.”

“While a number of the employees involved in misconduct have already left the bank, those that remain are being terminated or banned from the New York banking system,” he added.

Under the settlement deal, Deutsche Bank has entered into a deferred prosecution agreement to settle charges it rigged the rates. The overall $2.5 billion penalty includes Deutsche Bank paying $340 million to the UK's Financial Conduct Authority (FCA), while the rest is paid to various US agencies.

The statement included example communications between Deutsche Bank traders as evidence that the bank was involved in manipulating banking rates between 2005 and 2009.

The Libor rate is an average of what banks charge for lending to each other. Moreover, it sets a benchmark for interest rates for trillions of dollars' worth of loans around the world - from mortgages and student loans to credit cards and complex derivatives.

Other banks, including Switzerland's UBS and Britain's Barclays, were also involved in the scandal. While UBS agreed to pay $1.5 billion in 2012 as part of a global settlement, Barclays paid $453 million.

The fine imposed on Deutsche is so large because the bank also “misled the regulator, which could have hampered its investigation,” British regulator FCA said in a statement, adding that it was a record penalty handed down in Britain for such an offence.

Categories: Economy, International.

Top Comments

Disclaimer & comment rules
  • ChrisR

    Breakdowns R Us

    TOLD YOU!

    Apr 24th, 2015 - 11:05 am 0
  • Stevie

    Deutsche Bank is one of some 20 banks involved in the Libor scandal, Chris.

    It's a good start though... Although 2.5B dollars is peanuts compared to the amount of money the scandal involved....

    Apr 24th, 2015 - 06:04 pm 0
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