Deutsche Bank Settlement Over Libor Rigging Likely to Exceed $1.5B

According to media reports, Deutsche Bank AG (DB) could settle allegations over Libor manipulation with U.S. and British regulators as early as this month. A source reports that the settlement is likely to be larger than $1.5 billion and unit Deutsche Bank Group Services may even plead guilty.

Regulators expected to be involved in any settlement are the U.S. Department of Justice, the Department of Financial Services in New York, the Commodity Futures Trading Commission, and U.K.’s Financial Conduct Authority. Deutsche Bank is one of several banks probed over accusations of London interbank offered rate manipulation.

Libor is the key interest rate linked to mortgages, credit cards, student loans, and other instruments. The bank is accused of giving false data to a British Banker’s Association daily survey, which impacted Libor’s daily rate in numerous currencies, such as the U.S. dollar, the Euro, and the yen.

Already, UBS Group AG (UBS), Barclays (BARC), Rabobank Groep of the Netherlands, Royal Bank of Scotland Plc (RBS), and Lloyds Banking Group Plc have arrived at settlements over similar allegations. Also, last year, six global banks paid $4.3 billion to resolve civil claims that they manipulated foreign exchange rates. Those cases were settled with the FCA and the CFTC. A number of banks have yet to resolve the DOJ’s criminal probes against them for FX rigging.

A more than $1.5 billion settlement with Deutsche Bank would be the largest one involving a bank over Libor manipulation allegations to date. Already, the German lender was fined $773 million by the European Union for euro interbank offered rate and yen Libor manipulation. The bank is also under scrutiny by Bafin, which is the financial market regulator in Germany.

In other Libor rigging-related news, a federal judge in New York ruled last week that a securities lawsuit against Citigroup (C), Credit Suisse Group AG (CS), Barclays Bank PLC, and dozens of other banks failed due to lack of personal jurisdiction and because the plaintiff, Sheldon Solow brought his claims too late.

The judge said that his court did not have jurisdiction over the foreign banks accused of involvement in the alleged scam that puportedly cost the real estate mogul $100 million.

Solow contended that he would have never paid out that much money if he’d known that the banks were colluding with one another and that this would cost him. He and 7 West 57th Street Realty Co. LLC argued that the foreign banks should have made their jurisdictional arguments in a previous motion to dismiss.

U.S. District Court Judge Paul G. Gardephe, however, said that in light of the U.S. Supreme Court’s ruling last year in Daimler AG v. Bauman, which made tougher the rules regarding bringing American cases against foreign banks that have a New York presence, Solow lost his case.

Deutsche Bank Settlement Over Libor Rigging Likely to Exceed $1.5B, Bloomberg, April 9, 2015

Deutsche Bank comes close to reaching Libor settlement, Financial Times, April 10, 2015

Banks Escape Real Estate Mogul’s $100M Libor-Rigging Suit, Law 360, April 1, 2015

More Blog Posts:
Ex-Rabobank Trader Banned from Financial Services Industry in Britain for Libor Manipulation, Another Pleads Not Guilty in the US, Institutional Investor Securities Blog, March 29, 2015

Libor Manipulation Cases Get the Green Light from U.S. Courts, Libor Manipulation Cases Get the Green Light from U.S. Courts, Institutional Investor Securities Blog, January 30, 2015

Texas-Based Broker-Dealer Faces SEC Charges Over Supervisory and Customer Protection Violations, Stockbroker Fraud Blog, March 6, 2015