Germany’s financial watchdog has found no evidence to date that Deutsche Bank violated money laundering rules in Russia, people close to the matter said yesterday, possibly relieving one headache for the country’s biggest bank.
The Russian case is just one of many regulatory investigations that have combined to push Deutsche Bank into the most damaging crisis in the 146-year- old bank’s recent history.
Last month, a US Department of Justice (DOJ) demand for up to $14 billion to settle claims that Deutsche Bank mis-sold US mortgage-backed securities before the financial crisis sent the bank’s shares to their lowest ever levels.
Regulators in Russia, Europe and the US are also investigating
Even if Bafin, which oversees Deutsche Bank in its home market, does give the bank the all-clear over its Russian business, regulators in Russia, Europe and the US are also investigating it over so-called “mirror trades”.
These may have allowed clients to move money from one country to another in 2014 without alerting authorities, potentially enabling them to breach Western sanctions on Russia over the Ukraine conflict.
German regulator Bafin is nearing the end of its investigations and may impose no demands other than requiring Deutsche Bank to improve its risk management, the sources said, confirming a Sueddeutsche Zeitung report.
Bafin focused on whether Deutsche Bank’s systems were up to speed in identifying dubious trades being carried out on its platforms.
The UK’s Financial Conduct Authority as well as the DOJ and the Department of Financial Services have each launched investigations into whether any European or US sanctions against Russian individuals were violated.
Although the view of these authorities is not yet known, investors fear that Deutsche Bank may have to put aside more money to cover its legal bills.
Earlier this year the bank raised its provisions for a potential settlement in the Russia case, which has prompted it to partially pull back from the country.
“We reckon that the bank’s €5.5 billion in provisions may be insufficient to cover all ongoing litigation cases,” Scope Ratings said in note yesterday.