Deutsche Bank gave false declarations to the FCA and British Bankers’ Association, took years to produce evidence for the regulator and used a call recording system that was “not fit for purpose”, the FCA has found.
Earlier today the bank was fined a record £227m by the FCA for manipulating Libor and Euribor.
Combined with fines imposed by other regulators in the US, the total penalties amount to $2.5bn (£1.7bn).
The final notice reveals a number of incriminating messages between traders.
On 1 April 2005, a derivatives trader requested: “Could we pls have a low 6mth fix today old bean?”
On 29 December 2006, a manager asked a Libor submitter: “Could I beg you for a low 3m fixing today please…that would be the best xmas present ;)”. That day, the bank’s three-month Euribor submission was 3.70, a three basis point drop from the previous day.
Another message read: “We’re going to get in trouble if we keep moving it up and down…”.
The FCA says Deutsche Bank “recklessly” provided it with inaccurate and misleading information.
A German financial regulator commissioned a review of Deutsche Bank’s Libor and Euribor misconduct in 2012.
In 2013 the bank said in a speaking note designed for a conversation with the FCA that the German regulator had “explicitly stated” it would not approve of Deutsche Bank sharing details of the report with foreign regulators. This was repeated in later exchanges between managers at the bank and the FCA’s supervision department.
The FCA says this was “inaccurate and misleading”. The German regulator had not placed any restriction on disclosing the report to the FCA.
In addition, in January 2011 a compliance officer signed confirmation to the BBA stating that the bank’s Libor submissions had been audited. However, this was not the case.
In February, Deutsche Bank received a request from the FCA for an attestation on the adequacy of the systems and controls in place for its Libor submissions.
The request was addressed to a senior manager, but was prepared by the same compliance officer who signed the BBA confirmation.
The attestation was signed by the senior manager without taking any steps to verify the information. It confirmed that spot checks of a sample of Libor submissions had been carried out and that email and instant messaging communication was monitored to flag key words and phrases. Neither of these claims were true.
The bank also misled the FCA about the records it held, and was “unacceptably slow” in producing requested information.
In July 2012, it destroyed 482 tapes of telephone calls which the FCA had asked it to preserve.
It also took over two years to identify and produce all relevant audio recordings that had been requested by the FCA in December 2012.
The regulator says the bank’s system for recording traders’ telephone recordings was “not fit for purpose”, as it did not allow it to identify and recover recordings for particular traders in a reasonable timeframe.