Exclusive: Germany pushes Libor probe of Deutsche Bank

Fri Jul 6, 2012 2:17pm EDT

A closed branch of Germany's largest bank 'Deutsche Bank', is pictured in a parking garage in Bochum June 4, 2012. REUTERS/Ina Fassbender

A closed branch of Germany's largest bank 'Deutsche Bank', is pictured in a parking garage in Bochum June 4, 2012.

Credit: Reuters/Ina Fassbender

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FRANKFURT (Reuters) - Germany's markets regulator has launched a special probe into Deutsche Bank over suspected manipulation of interbank lending rates, joining authorities around the globe investigating the world's largest banks, two people familiar with the matter said on Friday.

Investigators in the United States, Europe and Japan are examining more than a dozen big banks over suspected rigging of the London Interbank Offered Rate (Libor). Britain's Barclays has so far been the only bank to admit wrongdoing, agreeing last week to pay a fine of more than $450 million.

The Libor rates, compiled from estimates by large banks of how much they believe they have to pay to borrow from each other, are used to determine interest rates on trillions of dollars worth of contracts around the world.

The two sources said Germany's BaFin regulator was now probing Deutsche Bank with a "special investigation", a process initiated by the regulator which is more severe than a routine investigation initiated by a third party.

The results were expected to emerge in mid July, one of the sources said.

Deutsche Bank said earlier this year it was cooperating with authorities investigating manipulation of Libor, the only German bank to make such a disclosure so far.

The bank declined to comment on Friday but referred to its quarterly report, which said it has received subpoenas and requests for information from U.S. and European authorities in connection with setting interbank rates.

BaFin declined to comment specifically on whether it was probing Deutsche Bank but said it was in looking into suspected manipulation of Libor rates by banks.

"We are making use of our entire spectrum of regulatory instruments, so far as this is necessary," a spokesman said.

Deutsche Bank has disclosed that it is cooperating with the U.S. Department of Justice, the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, and the European Commission on Libor. These inquiries relate to periods between 2005 and 2011.

As the credit crisis intensified between 2006 and 2008, allegations started mounting that Libor no longer reflected the real cost banks were paying for funds. Authorities have been examining whether traders tried to influence the rate to profit on bets on the direction it would go.

The daily Libor poll asks banks at what rate they think they will be able to borrow money from each other in 10 major currencies and for 15 borrowing periods ranging from overnight loans to 12 months.

The rates submitted by banks are compiled by Thomson Reuters, parent company of Reuters, on behalf of the British Bankers' Association.

(Reporting by Jonathan Gould, Alexander Huebner and Philipp Halstrick; writing by Edward Taylor)

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Comments (6)
hariknaidu wrote:
Surprise! Libor has been managed as an unofficial cartel of the Big banks with tacit consent of BOE. Eventually the in vestigations will unfold and the Libor banking cartel will emerge as the most nefarious white-collar crime in financial sector during postwar period. It has been made possible because City(Lon) is politically protected by not only the Chancellor but also the regulator called BOE.

There is no basis on which white-collar crime was punished after 9/11 in US. The same may apply in City. But don’t bank on it…because Reuter’s was officially reporting on the Libor for the big ban ks.

Jul 06, 2012 3:11pm EDT  --  Report as abuse
Nativo13 wrote:
Prime Minister Tony Blair receives 5 million pounds per year as a “consultant” from JP Morgan…

Jul 06, 2012 3:45pm EDT  --  Report as abuse
JBltn wrote:
So the US DoJ, SEC & CFTC are also investigating the Deutsche Bank for any involvement in LIBOR rate rigging; does that imply that the same agencies are also investigating the Big Four US banks and Wall St Investment Bankers?
The article states that the German authorities expect to conclude their investigation by mid July; if they find evidence that the Deutsche Bank rigged LIBOR rates, regulatory fines and intensified oversight will quickly follow as will a criminal investigation.

The article didn’t report any statements from US agencies concerning their LIBOR investigations. That isn’t a bit surprising nor is the lack of information from any bank’s second quarter reports of LIBOR rate rigging subpoenas become public knowledge. A rational person would conclude those US banks are currently being investigated for possible rigging; yet no news is -no news. It’s possible, I suppose, that the banks that received subpoenas were instructed to keep that information confidential, however I don’t believe that or that it would remain confidential more than 48 hours. The implications inherent in the lack of statements by US regulatory agencies and zero public knowledge about such investigations are as unusual as be alarming. That being said doesn’t mean that US regulatory agencies ARE investigating US Bank [ers]; I said a ‘rational person’…. I believe that the US government is no longer a rational structure. The effects from a decade of bitter political polarization and divisive zero sum policy struggles resulted in legislative gridlock, and a dysfunctional Federal government structure; the root cause being conflicting political ideological beliefs, fueled by self-serving, massive corporate political donations.

Jul 06, 2012 4:17pm EDT  --  Report as abuse
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