* Finance Ministry seeks full and complete cleanup
* Deutsche, Bafin disagree over over some reform proposals
* Deutsche Bank says cooperating fully with regulators
FRANKFURT, Jan 6 Germany's finance ministry
piled pressure on Deutsche Bank to reform its corporate culture
on Monday, adding its voice to that of the country's industry
watchdog which said the bank had not done enough to clean up its
act despite several scandals.
A strongly worded report by Bafin, Germany's financial
regulator, was leaked to German media at the weekend -
suggesting Deutsche Bank's co-chief executives Anshu
Jain and Juergen Fitschen have made little impression with their
efforts so far to restore the bank's reputation.
Bafin and other regulators are investigating Deutsche and
more than a dozen other banks and brokerages over allegations
they manipulated benchmark interest rates such as Libor and
Euribor, which are used to benchmark trillions of dollars of
financial products from derivatives to mortgages and credit card
Separately, Deutsche faces several other lawsuits and
investigations including a decade-old case led by heirs of the
Kirch media empire and charges by the EU that it was among 13
investment banks that blocked access to the lucrative credit
derivatives market. [ID: nL5N0IQ19U]
Bafin is approaching the end of its investigation into the
interest rate accusations and has concluded, according to the
report published in German weekly Der Spiegel, that Deutsche has
not done enough to investigate and clear up the incident.
Finance Ministry spokesman Martin Kotthause said on Monday:
"Bafin should and will vigorously pursue all accusations when it
comes to the issue of the manipulation of interest rates."
"We attach great importance to ensuring that this gets truly
cleared up fully and completely."
Bafin's leaked report also said it was not clear "whether
senior management was involved in or had knowledge of possible
manipulation attempts", and pointed to "grave organisational
Bafin declined to comment on the report.
A Deutsche Bank spokeswoman said the bank was closely
cooperating with Bafin in various investigations but declined to
comment further. "No current or former member of the management
board had any inappropriate involvement," she said.
Deutsche Bank has been in intensive talks with Bafin since
the latter's interim report was completed in August. According
to a source at the bank who declined to be named, they have
agreed on some reforms, such as compliance systems to improve
internal governance, but are still in disagreement on others.
In response to the financial crisis, Deutsche has attempted
to tidy house by banning chatrooms, hiring a new head of
compliance, forming oversight committees and erecting barriers
between trading operations.
Co-CEOs Fitschen and Jain aim by 2015 to have a streamlined
and more profitable organisation.
But investors remain cautious given the risk of further
litigation and fines.
"This leaves some... discomfort about whether there are more
issues to come," said one equity analyst at a major bank.
"Litigation is going to stay high throughout all of 2014."
Deutsche shares are discounted accordingly, according to
StarMine data, with an estimated forward price/book ratio of 0.6
compared to 0.9 on average for rivals, and a forward
price/earnings ratio of 8.7 versus 11.8 for rivals.
Deutsche Bank was hit with more than 2.1 billion euros in
penalties in December alone - one from the EU for rate rigging
and another from the United States to settle claims over
mortgage-backed securities sales.
The bank signalled in December that it might have to top up
its 4.1 billion euro war chest for settlements and fines.
(Reporting by Annika Breidthardt, Gernot Heller, Philipp
Halstrick and Thomas Atkins; Editing by Sophie Walker)