deutsche bank

German Regulator Questions Jain Comment on Libor

Anshu Jain Bloomberg
Taking a closer look at what he knew and when.
  • Why it matters

    Why it matters

    If Deutsche Bank’s co-chief executive is found to have known sooner that illegal rate manipulation was underway at the bank, this will further damage the bank’s business and reputation.

  • Facts


    • Seven traders at Deutsche Bank were found to have manipulated the Libor rate, the benchmark rate that banks rely on to charge each other for overnight loans.
    • Deutsche Bank has paid a record fine of €2.2 billion or $2.5 billion to regulators in the United States and the United Kingdom as a result of the traders’ manipulation.
    • At the end of June, co-chief executive Anshu Jain will depart from Deutsche Bank. Jürgen Fitschen, his co-CEO since 2012, will remain on for a year together with John Cryan, who will become the sole CEO in one year.
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Anshu Jain was already due to step from the helm of Deutsche Bank at the end of this month. Now it seems his departure will not come quietly.

In a scathing report into the role that Germany’s largest bank played in the global Libor rate-fixing scandal, Germany’s financial regulator BaFin has challenged statements made by Mr. Jain about when he first heard that traders in his department may have manipulated the interest rate benchmark.

It seems that Anshu Jain’s statements from two years ago about when he first learned of traders in his department involved in manipulating Libor are now coming back to haunt him. BaFin alleges he may have been made aware of the potential scandal within his bank as early as 2008.

Deutsche Bank, Germany’s largest bank, recently received a record $2.5 billion fine from the authorities in the United States and the United Kingdom for manipulation of the Libor rate, a scandal that hit a number of major banks around the world. Traders were found to have colluded to influence the interest rate benchmark, which regulates how much certain banks charge each other for short-term loans across the world.

The supervisor complained that Deutsche Bank had wrongly suggested that its senior management had been exonerated by the supervisory authority.

The financial supervisor is now investigating whether Mr. Jain knew sooner that traders at Deutsche Bank were manipulating the benchmark. Mr. Jain has told the Bundesbank that he first found out about the possible manipulation in 2011. BaFin alleges he already received an email in 2008 containing rumors that the rate manipulation was underway.

The allegations by BaFin are contained in a letter signed by Frauke Menke, the head of banking supervision at the German financial regulator. It was sent to Deutsche Bank in May, according to well-informed sources, along with a long-anticipated closing report of BaFin’s special investigation into the case.

The letter marks a scathing review of Deutsche Bank’s management of the scandal. In addition, the supervisor complained in its letter that Deutsche Bank had wrongly suggested, ahead of the report’s release, that senior management would be exonerated by the regulator.

Handelsblatt’s sources confirmed details that were initially reported by the Financial Times. The supervisor is also reportedly considering taking  additional special measures against the bank in light of its findings. Its options include calling on board members to stand down.

Mr. Jain is already on his way out. He will leave Deutsche Bank at the end of June as part of a change of leadership at Deutsche Bank after disappointment with his leadership. His co-CEO Jürgen Fitschen will remain with the bank for another year. John Cryan, a British banker, will co-lead Deutsche Bank from July and will become sole CEO once Mr. Fitschen departs next year.

While the management change may have already happened, the bank’s letter raises further questions about the credibility of the bank’s explanation of Mr. Jain’s departure from the bank.

So far, Deutsche Bank has insisted that Mr. Jain’s departure was not due to pressure from the German financial supervisor.

The decision to appoint Mr. Cryan was explained by widespread disappointment with Mr. Fitschen and Mr. Jain’s failure to overhaul the bank’s strategy during their tenure. The bank continues to struggle with investigations by regulators and high fines in the wake of the 2008 financial crisis.

At the bank’s shareholder meeting in April, nearly one in four shareholders voted against supporting the leadership at the time, an unusually strong showing of disapproval.

Over recent months, the bank’s executives repeatedly stated that BaFin’s investigation had “not produced any additional incriminating material.” No-one apparently expected the supervisors “to suddenly pull out a red card.” However, the letter in May suggests that this remained a possibility.


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Deutsche Bank will have to respond to the letter in the coming days.

According to a spokesperson from the bank, Mr. Jain has repudiated the accusation that he misled the Bundesbank back in 2012. The bank’s statement said that, “He understood the Bundesbank’s question to refer to when he had first heard of the rumors that the Libor rate was being possibly manipulated by Deutsche Bank, and not to the rumors of manipulation on the market, which were publicly reported in 2008.”

According to circles at the bank familiar with BaFin’s letter, Mr Jain is also accused of creating an organizational structure which enabled – or made easier – the manipulation of the rates. This referred to a change of the way seating was organized in the trading room, creating a conflict of interest  between traders and their colleagues who set the reference rate.

Deutsche Bank declined to comment on the matter. It stated only that the financial supervisor did confirm the bank’s internal investigations, which found that no current or former board member of the bank or broader leadership committee had sanctioned the manipulation by the bank’s traders.

The financial supervisory authority Bafin was also unwilling to comment on the issue.

Next, the bank will have to formally respond; it had eight weeks to do so from the report which was dated May 11, the Financial Times reported.

Beyond this, as Mr. Fitschen continues to testify weekly in court about the bank’s role in the Kirch media group’s bankruptcy, speculation is likely to continue about the credibility of Deutsche Bank’s management.

Clearly, right from the outset, Mr. Cryan will have plenty to do to win back trust when he takes up his new post mid-week.


Handelsblatt’s Daniel Schäfer leads financial coverage, Katarina Slodczyk is a correspondent for Handelsblatt in London, and Frank Drost writes about banking and financial regulation. To contact the authors:,

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