New | Deutsche Bank to pay record US$2.5 billion to resolve Libor probes

Deutsche Bank has been ordered to pay a record US$2.5 billion in fines and fire seven employees to settle American and British investigations into its role in manipulating the Libor benchmark interest rate.

Deutsche Bank must sack six London employees and one in Frankfurt who engaged in wrongful conduct, the New York Department of Financial Services (DFS) said on Thursday. It did not identify them by name but said they included a managing director, four directors and two vice-presidents.

"Deutsche Bank employees engaged in a widespread effort to manipulate benchmark interest rates for financial gain," DFS superintendent Benjamin Lawsky said. "We must remember that markets do not just manipulate themselves: it takes deliberate wrongdoing by individuals."

The penalty is the biggest yet in the interest-rate rigging scandal. The settlement comes on top of the €7.1 billion Deutsche Bank has spent on litigation in the past three years. The firm still faces legal challenges including probes into foreign exchange, mortgage- and asset-backed securities dealings and alleged US sanctions violations. Co-chief executives Anshu Jain and Juergen Fitschen are reviewing options to boost returns.

The US Commodity Futures Trading Commission fined the bank US$800 million, while the US Justice Department levied a US$775 million penalty and Lawsky's agency will receive US$600 million in the settlement.

Britain's Financial Conduct Authority said it had fined Deutsche Bank US$340 million. "The fine is so large because Deutsche Bank also misled the regulator," it said, adding that it was a British record penalty for such an offence.