A second senior employee at Deutsche Bank has committed suicide, raising fears that the legal and economic pressures facing the investment bank are taking too much of a toll on its staff.
Charlie Gambino, a senior lawyer in the bank’s legal department in New York, killed himself last week: the second employee to take their own life this year.
Earlier this year, risk manager William Broeksmit was found dead in London, shortly before he was due to retire. Mr. Broeksmit was a close friend of Deutsche Bank’s co-chief executive, Anshu Jain, and had been working closely on Deutsche Bank’s legal problems. The bank emphasized that he was not suspected of any wrongdoing, but his e-mails had been made public by the U.S. Senate in its inquiry into whether some financial institutions were evading tax and an investigation revealed that Mr. Broeksmit had suffered from lack of sleep and anxiety.
Deutsche Bank is currently fighting 1,000 legal disputes, and faces fines for manipulating interest rates and irregularities in its mortgage lending business.
Mr. Gambino had worked for Deutsche Bank for 11 years, rising to the post of managing director and associate general counsel.
On Sunday, Deutsche Bank issued a statement saying, “Charlie was a beloved and respected colleague who we will miss. Our thoughts and sympathy are with his friends and family.”
The human tragedy of Mr. Gambino’s death reflects the bank’s extensive difficulties.
At the end of last week Deutsche Bank announced that it would post €894 million ($1,133 million) for legal costs for the third quarter. The higher amount is intended to cover fines relating to the Libor scandal, and sources said that Deutsche Bank hopes this new amount is enough to cover all potential fines.
Legal costs will continue to put pressure on Deutsche Bank’s bottom line.
The bank may have to set even more money aside in the coming three quarters, according to one insider, who told Handelsblatt there was a possibility that these would amount to one-off costs of up to €1 billion per quarter. At the same time, a source close to the management board said the bank will do all it can to avoid posting a loss.
In the third quarter, much of its spending was to cover fines relating to other legal issues. The bank faces charges related to the U.S. mortgage scandal and fines for contravening U.S. sanctions.
The additional sums were included in documents published by the European Central Bank.
So far, Deutsche Bank has set aside some €3 billion to cover possible legal costs.
Most of these costs relate to the Libor scandal, which alleges that currency traders colluded with one another to fix rates to maximize profits. Senior managers hope to resolve the issue with authorities from the United States and the United Kingdom by the end of this year to avoid further fines.
Deutsche Bank had better news in relation to the European Central Bank’s stress test, the results of which were announced Sunday. The bank passed the test with a hard capital ratio of 8.78 percent, well above the 5.5 percent minimum, which is viewed as a success for finance chief Stefan Krause.
Deutsche Bank will announce its results for the third quarter on Wednesday. Analysts anticipate the bank’s investment banking business and asset management will be found to be profitable. According to insiders, staff at the bank are frustrated that operating profits are repeatedly impacted by money set aside for fines.
Thomas Jahn, Peter Köhler, Laura de la Motte and Yasmin Osman report on banks for Handelsblatt out of New York and Frankfurt. To contact the author: Jahn@handelsblatt.com.