Legal risks have become practically synonymous with Deutsche Bank in recent years. It’s damaging and costly for Germany’s largest bank – and part of the reason former co-chief executive Anshu Jain lost his job less than two months ago.
It’s now the job of John Cryan, who replaced Mr. Jain as co-CEO at the start of July, to clean up the legal minefield. Unfortunately for him, Mr. Jain’s departure hasn’t marked an end to the string of damaging revelations stemming from the firm’s investment banking unit, which is the largest in Europe.
When the bank’s new chief financial officer Marcus Schenck in July presented investors with a summary of the most menacing legal cases still facing the bank, there was a new case that had suddenly been added to the top 5 list of horrors: A case of suspected money-laundering in Russia.
Since then it has emerged that U.S. regulators are investigating into whether traders at Deutsche Bank’s offices in London and Moscow may have conducted as much as $6 billion worth of suspicious trading, helping wealthy Russian clients convert money into dollars.
The consequences of this new scandal could be massive. Several well-informed individuals told Handelsblatt that the Russia problem could be as serious as the Libor scandal, a global scheme to fix the benchmark interest rate that cost Deutsche Bank $2.5 billion in fines – more than any other bank that was implicated.