(Reuters) - The Federal Reserve Bank of New York has found serious problems in Deutsche Bank AG’s U.S. operations, including shoddy financial reporting, inadequate auditing and oversight and weak technology, the Wall Street Journal reported.
In a letter to the German lender’s executives last December, a senior official with the New York Fed described financial reports produced by some of the bank’s U.S. arms as “low quality, inaccurate and unreliable,” the report said.
"The size and breadth of errors strongly suggest that the firm's entire U.S. regulatory reporting structure requires wide-ranging remedial action," the Journal said, quoting documents reviewed by it. (on.wsj.com/1r3VIn3)
The Dec. 11 letter said the bank had made “no progress” at fixing previously identified problems, WSJ said.
“We have been working diligently to further strengthen our systems and controls and are committed to being best in class,” a Deutsche bank spokeswoman told Reuters in an email.
“As announced in 2013, we are investing 1 billion euros as part of this effort, and we have appointed 1,300 colleagues to focus on it as part of a dedicated program.”
A New York Fed spokeswoman declined to comment.
This was a “systemic breakdown” and “expose the firm to significant operational risk and misstated regulatory reports,” according to the letter from Daniel Muccia, a New York Fed senior vice president responsible for supervising Deutsche Bank.
The New York Fed, as the U.S. central bank’s eyes and ears on Wall Street, directly supervises the biggest U.S. and foreign banks in part with the use of embedded regulators who go to work each day inside the banks.
The letter ordered senior Deutsche Bank executives to ensure steps were taken to fix the problems. It also said the bank might have to restate some of the financial data it has submitted to regulators, the Journal reported.
Reporting by Avik Das in Bangalore; Editing by Joyjeet Das