Deutsche Bank

The U.S. Justice Department on Monday charged Deutsche Bank’s former head of subprime mortgage trading with civil fraud in connection with conduct dating back to the 2007-2009 financial crisis.

According to an announcement from the Department of Justice, Paul Mangione, the former Deutsche Bank head of subprime trading, allegedly “engaged in a fraudulent scheme to misrepresent the characteristics of loans backing two residential mortgage-backed securities that Deutsche Bank sold to investors that resulted in hundreds of millions of dollars in losses.”

Deutsche Bank is gearing up to re-home many of its trading and investment-banking assets back to Frankfurt from London over Brexit, according to a Bloomberg report.

Germany’s largest lender would relocate most of the business reported in London to a so-called booking center in Frankfurt under the plan, said the people with knowledge of the matter. The strategy, which is still being finalized and would be reviewed if the Brexit scenario changes, will probably be implemented over the next 18 months; trading jobs and up to 20,000 client accounts could also be shifted, the source told Bloomberg.

Chinese conglomerate HNA Group has become Deutsche Bank AG’s largest shareholder after increasing its stake in the German lender to almost 10%, according to a filing made by asset manager C-Quadrat and other entities. It took HNA’s stake to 9.92%, following an initial stake of 4.76%, which it had earlier secured through C-Quadrat.
The acquisition of a significant stake in a pillar of European finance is another example of China’s growing global influence. Last year, Chinese firms announced around $220 billion worth of deals for foreign companies, far more than any previous year. HNA’s increased stake in Deutsche Bank makes it the lender’s largest shareholder, ahead of members of Qatar’s royal family and U.S. money manager BlackRock, according to public filings.

The US Federal Reserve has fined Deutsche Bank $156.6m for violating foreign exchange rules and breaching the Volcker Rule. The US unit was fined for "unsafe and unsound practices" in the foreign-exchange markets, the Fed said in a statement. The firm "failed to detect and address that its traders used electronic chatrooms to communicate with competitors about their trading positions," the central bank added.

Central bank officials are "requiring the firm to co-operate in any investigation of the individuals involved in the conduct underlying the FX enforcement," according to the statement.

Deutsche Bank has lost several senior employees after paying out employee bonuses last month. Earlier this year, the bank cut its 2016 bonus pool by nearly 80%.

According to Bloomberg, at least three executives have left the bank’s trading unit in Asia, two of whom have reportedly taken jobs at competitor Credit Suisse. Europe’s largest investment bank in January scrapped bonuses of its top executives and slashed variable pay for other senior employees as chief executive John Cryan seeks to rebuild capital buffers eroded by misconduct fines.

A US court imposed a sentence on a Deutsche Bank unit Tuesday for its role in an interest rate rigging scheme, two years after the bank reached a $2.5 billion settlement with British and US authorities.

The development closed a minor chapter in the legal woes facing the German banking giant, which has rushed to resolve multiple cases with US officials in recent months and still reportedly faces an investigation over possible money laundering.

Deutsche Bank has apologised to Germans for its costly mistakes, the ad signed by CEO John Cryan on behalf of the bank’s top management, ran Saturday in the Frankfurter Allgemeine Zeitung, Sueddeutsche Zeitung and several newspapers.

"Serious mistakes were made," reads the advertisement on Saturday, days after the lender announced an annual loss of €1.4 billion in 2016. "We would like to apologize for that."

"Since I became chief executive of Deutsche Bank one-and-a-half years ago, we have had to pay around five billion euros in legal cases largely originating from several years ago," chief executive John Cryan said in the ad.

Deutsche Bank posted a loss of €1.4 billion (£1.2 billion) for 2016 on Thursday, citing restructuring and "negative news flow" around a fine from the US Department of Justice.
In the final three months of 2016 alone the bank lost €1.9bn, mainly thanks to a record penalty in the US. Earlier this week, it was fined £500m in connection with a Russian money laundering plan.

Looking beyond the net result, Deutsche saw revenues shrink by 10% in 2016 compared with the previous year, at just over €30 billion, "as a challenging market environment and persistent low interest rate environment negatively impacted the business", the bank wrote in the statement. Meanwhile, the bank’s underlying, or operating result before interest and taxes was €810 million in the red.