(Reuters) - U.S. banking regulators have ordered Deutsche Bank AG to improve its compliance systems and risk controls, the Wall Street Journal reported, citing people familiar with the matter.
The Federal Reserve Bank of New York and New York state’s Department of Financial Services want the bank to overhaul its technology and compliance procedures through a “memorandum of understanding” (MOU), the newspaper reported.
An MOU is the most severe form of informal action. It is generally used when a bank has multiple deficiencies that regulators believe can be corrected by current management.
Deutsche Bank received a letter last December from the New York Fed, which described financial reports produced by some of the bank’s U.S. divisions as “low quality, inaccurate and unreliable.”
The MOU took effect in 2012 and is still in place, the Journal said. The New York Fed has set a mid-2015 deadline to correct a list of high-priority issues, the report said.
“We decline to comment on the alleged communication with our regulators,” Deutsche Bank said in an emailed statement.
Reporting by Tanya Agrawal; Editing by Sriraj Kalluvila