UPDATE 2-Deutsche Bank hires Swiss lawyer to tighten controls

Tue Aug 5, 2014 12:25pm EDT

* Nadine Faruque qualified Swiss, U.S. attorney

* Faruque reformed compliance at Italy's UniCredit

* Deutsche faces long list of regulatory challenges (Adds background on Faruque, bank compliance efforts)

By Thomas Atkins

FRANKFURT, Aug 5 (Reuters) - Deutsche Bank named U.S.-Swiss lawyer Nadine Faruque to lead a reform of its regulatory compliance practices, as it battles to cut a long and expensive list of investigations and potential settlements that have dogged it since the financial crisis.

Faruque, 53, joins from Italy's UniCredit, where as general counsel and compliance officer she led governance reform efforts and was said to keep a cool head during the period of turmoil that swept the bank during the crisis.

Deutsche Bank launched a reform plan in 2012 to boost compliance functions after getting hit by a wave of post-crisis investigations. The bank has paid 5.6 billion euros ($7.5 billion) in the past two years in fines and settlements and expects to pay another 3 billion in 2014.

Germany's flagship lender has also pushed a 1 billion euro technology revamp and announced hundreds of new hirings designed to fortify compliance in the United States and elsewhere as regulators worldwide tighten controls on the big systemic banks that were deemed to occupy the centre of the financial crisis.

Deutsche Bank is cooperating with investigators over a long list of probes, including attempts to manipulate interest rates, currency trading rates, and gold benchmark rates. Deutsche has also begun settlement talks with U.S. authorities over dealings with blacklisted countries such as Iran.

The high cost of compliance failures has crushed profitability at a number of European banks in recent quarters.

In July, France's largest bank BNP Paribas pleaded guilty to two criminal charges, agreed to pay $8.9 billion and have its right to clear certain dollar transactions suspended in order to resolve accusations it violated U.S. sanctions against Sudan, Cuba and Iran.

In a scathing report leaked to media in January, German regulator Bafin said that Deutsche Bank had failed to draw the necessary consequences with senior personnel following an interest rate manipulation scandal.

Deutsche's previous global head of compliance, government and regulatory affairs, Andrew Procter, later left the bank to work for a law firm.

STRENGTHENING THE RANKS

Since his departure, Deutsche Bank has made a number of senior appointments, filling a new compliance and risk management position with a top McKinsey consultant, Thomas Poppensieker, charged with implementing the bank's so-called "three lines of defence" programme.

Deutsche has otherwise named women exclusively to the top ranks of governance, compliance and regulatory affairs.

Sylvie Matherat joined on Aug. 1 as global head of government and regulatory affairs. Matherat came from the Bank of France to implement new regulations and manage regulatory relationships.

In addition, Deutsche named Daniela Weber-Rey as chief governance officer in April.

Swiss national Faruque will join the bank's executive committee and report to Stephan Leithner, member of the management board who oversees compliance, Deutsche Bank said in a statement on Tuesday.

Before joining UniCredit in 2008, Faruque worked in several senior legal positions at Merrill Lynch in London. She will assume her responsibilities on Dec. 1.

(1 US dollar = 0.7482 euro) (Editing by Erica Billingham and Mark Potter)

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