Cryan's Troubles

Deutsche Bank Settlement Overshadows Strategy

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Paul Achleitner, Deutsche Bank's supervisory board chairman, hopes his choice of John Cryan as the bank's CEO will reap rewards soon.
  • Why it matters

    Why it matters

    Deutsche Bank hopes to put the pre-crisis days behind it, but the latest legal settlement underlines the fact that past wrongdoing will be a stumbling block for many months and years to come.

  • Facts

    Facts

    • Twelve global banks have reportedly reached a $1.865 billion settlement with investors in the Untied States over allegations they fixed prices in the credit default swaps market.
    • The head of the Deutsche Bank’s supervisory board has appointed a new member to fill the position left vacant when John Cryan replaced Anshu Jain as co-CEO.
    • The appointment restores balance to the supervisory board, where labor representatives had been able to block decisions in Mr. Cryan’s absence.
  • Audio

    Audio

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Deutsche Bank has many problems to contend with at the moment. A reminder of that costly laundry list came this weekend, as Germany’s largest bank and 11 of its global competitors reportedly agreed to a nearly $1.9-billion civil settlement of charges that they fixed prices and limited competition in the credit default swap market.

The settlement in the United States marked yet another tacit acknowledgment of the corruption of the investment banking model in the run-up to the 2008 financial crisis, which many say caused the global economic meltdown that began with the collapse of investment bank Lehman Brothers in September of that year.

Deutsche Bank, based in Frankfurt, has itself faced more than €10 billion in fines and settlements over the last few years, including a $2.5 billion fine from U.S. regulators for its role in fixing the Libor interest rate benchmark.

John Cryan, a British banker who took over as Deutsche Bank’s chief executive in July, has pledged to bring the bank’s numerous legal problems under control, even taking lead of its legal division on a temporary basis since his appointment.

The new settlement highlights that Mr. Cryan may still have a long road ahead of him. Ongoing regulatory investigations include allegations of possible money laundering by traders in Russia, the violation of U.S. sanctions and the manipulation of currency markets.

It seems barely any area of global investment banking has escaped being tarnished by allegations of price fixing or misleading clients in the months and years leading up to the 2008 crash.

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