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Screenshot of a breaking news alert e-mail from Q2 2017
Whether acquiescence is a prudent stance to adopt by global banking institutions embroiled in the international probe which is currently underway in order to ascertain their positioning with regard to the alleged FX rate fixing that may have taken place is a matter of perspective, however today, Deutsche Bank (NYSE:DB), a firm at the center of the allegations, has begun to come to terms with the possibility that it may be penalized.
In a report by ValueWalk, the bank, one of the world’s largest FX dealers, is beginning to arrive at the realization that it could be fined by various regulatory agencies following investigations which began last year into the bank’s role in currency manipulation that has seen over two dozen traders suspended or terminated from their employment at some of the world’s largest banks. Those investigations have not led to any criminal charges yet but internal inquiries have led to those terminations and suspensions.
Whilst Deutsche Bank takes this particular stance, which, aside from possible fines from currency manipulation, includes the bank’s warning of fallout from its decision to raise $11.5 billion in new capital that would dilute the company’s stock and changes in European and United States legislation meant to rein in investment banks, FX trader that it suspended earlier this year after an internal investigation into allegations of misconduct, according to a report by Reuters yesterday.
This corporate stance represents a further step in this direction from last month’s news by LeapRate that the bank had set aside a considerable sum to provide for potential penalties levied against it for its part in the alleged rate fixing.
Whilst Lloyds did not provide the name of the reinstated trader, Bloomberg News reported in March that the first employee that Lloyds suspended, Martin Chantree, a senior foreign exchange dealer at Lloyds, had shared information with a forex trader at British oil company BP about an impending order from a client to sell 300 million pounds for dollars. BP at the time said none of its currency traders had engaged in inappropriate trading activity.
“We can confirm that, following a thorough investigation, we reinstated an employee who was suspended after allegations of misconduct were put to the Group,” Lloyds said in a statement.
“The individual was reinstated with no disciplinary action being taken and has returned to work.”
Britain’s Serious Fraud Office (SFO) said separately on Thursday it was examining information related to a global investigation into the possible manipulation of currency markets, although it has yet to open a criminal investigation.
While Deutsche Bank is likely to escape the penalties that BNP Paribas is looking at for its dealings with Iran and Sudan, it is far from free and clear in its dealings. Many industry insiders expect BNP Paribas SA (EPA:BNP) to face a fine as large as $8 billion in the coming weeks.
“The increasingly stringent regulatory environment to which Deutsche Bank AG (NYSE:DB) (ETR:DBK) is subject, coupled with substantial outflows in connection with litigation and enforcement matters, may make it difficult for Deutsche Bank to maintain its capital ratios at levels above those required by regulators or expected in the market,” Deutsche Bank stated publicly yesterday.