Germany’s financial watchdog has fined Deutsche Bank €23mn over a series of violations of the country’s securities and payments laws, the latest sign that Germany’s largest lender is struggling to move past its history of regulatory lapses.
The fine is BaFin’s second highest on record, behind the €40mn penalty the regulator meted out to Deutsche in 2015 over shortcomings in the bank’s anti-money laundering controls.
The bulk of the new fine — €14.8mn — was imposed over flaws in an internal investigation into mis-selling allegations in Spain flagged by a whistleblower in 2019.
Deutsche Bank’s internal investigation ultimately found that the lender pushed risky foreign exchange derivatives to corporate clients who wanted to hedge currency risks but in some cases were exposed to heavy losses. Fewer than 12 people were hit with sanctions by Deutsche, most for a lack of oversight but some for exploiting flawed controls in bad faith.
Spain’s National Securities Market Commission (CNMV) last month fined Deutsche Bank €10mn over alleged “very serious infringements” of Spanish and EU law, and said it failed to inform corporate clients properly about the risks associated with the products.
Deutsche has said it will appeal the fine from the Spanish watchdog.
BaFin on Tuesday scolded Deutsche Bank for investigating and remedying the issue too slowly. “The company did not make appropriate organisational arrangements to speed up the investigation of the breaches of the law and to implement measures to remedy the situation,” the regulator said.
Deutsche has said it will not appeal the fine imposed by BaFin.
The Financial Times reported in 2023 that Deutsche Bank continued to sell risky foreign exchange derivatives to companies in Spain that had suffered big losses from such products even after an internal inquiry found long-standing mis-selling.
BaFin also fined Deutsche’s domestic retail division Postbank €4.6mn for failing to record telephone conversations with clients who received investment advice and €3.7mn for the delayed processing of customer switching applications.
Deutsche Bank said in a statement that the penalty was covered by existing provisions and hence had no impact on its first-quarter profit.
“Deutsche Bank has fully co-operated with BaFin in all matters. Additionally, processes in the affected areas have been improved and controls have been strengthened.”