Deutsche may not face German penalty over Russian trades: sources

Thu Oct 6, 2016 7:23am EDT
 
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By Arno Schuetze and Kathrin Jones

FRANKFURT (Reuters) - Germany's financial watchdog has found no evidence to date that Deutsche Bank (DBKGn.DE: Quote) violated money laundering rules in Russia, people close to matter said on Thursday, possibly relieving one headache for the country's biggest bank.

The Russian case is just one of many regulatory investigations that have combined to push Deutsche Bank into the most damaging crisis in the 146-year old bank's recent history.

Last month, a U.S. Department of Justice (DOJ) demand for up to $14 billion to settle claims that Deutsche Bank mis-sold U.S. mortgage-backed securities before the financial crisis sent the bank's shares to their lowest ever levels.

Even if Bafin, which oversees Deutsche Bank in its home market, does give the bank the all-clear over its Russian business, regulators in Russia, Europe and the United States are also investigating it over so-called "mirror trades".

These may have allowed clients to move money from one country to another in 2014 without alerting authorities, potentially enabling them to breach Western sanctions on Russia over the Ukraine conflict.

German regulator Bafin is nearing the end of its investigations and may impose no demands other than requiring Deutsche Bank to improve its risk management, the sources said, confirming a Sueddeutsche Zeitung report. Deutsche Bank, whose shares were 1.2 percent higher at 0930 GMT, declined to comment.

Bafin, which also declined to comment on its investigation, focused on whether Deutsche Bank's systems were up to speed in identifying dubious trades being carried out on its platforms.

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The headquarters of Germany's Deutsche Bank is seen in Frankfurt, Germany, September 29, 2016. Picture taken September 29, 2016.      REUTERS/Kai Pfaffenbach