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German regulator questions Deutsche Bank over Danske scandal

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Germany's financial supervisor has asked Deutsche Bank, the country's largest lender, for information about its activities as a correspondent for scandal-plagued Danske Bank.

[FRANKFURT] Germany's financial supervisor has asked Deutsche Bank, the country's largest lender, for information about its activities as a correspondent for scandal-plagued Danske Bank.

"(Supervisor) BaFin asked us for information on Tuesday evening," a Deutsche spokesman said, adding that the request "is not a formal investigation".

BaFin confirmed it had asked for details from Deutsche but did not say exactly what information it was seeking, adding that the lender would be given time to compose its response.

In September, the financial authority took the unprecedented step of asking auditors from KPMG to monitor the progress of Germany's largest bank in battling illegal transactions such as money laundering, terrorist financing and organised crime.

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Deutsche admitted at the time that its record was not spotless.

In Jan 2017, American and British authorities ordered the bank to pay almost US$630 million over transactions originating in Russia.

The KPMG auditors will remain in place for three years, BaFin said.

This time, Deutsche is so far not the target of any probe, although the powerful US Securities and Exchange Commission (SEC) and Department of Justice are reportedly eyeing the Danske scandal closely.

Investigators in Copenhagen, Brussels, London and the United States are probing transactions at Danske relating to some 15,000 foreign clients who dealt with its Estonian branch.

A total of 9.5 million such payments totalling US$228 billion passed through the unit between 2007 and 2015, with a signficant proportion of them under suspicion.

Deutsche compliance chief Sylvie Matherat told a Frankfurt banking conference Wednesday that it had only a "limited role" in relation to Danske, as a correspondent bank handling foreign transactions.

That role put it "in the second line, not in charge of checking the clients," she added.

When handling transactions on behalf of another institution, "controls are limited because you don't have access to their client base," Ms Matherat said.

Deutsche did still carry out some checks, she insisted.

"On our side, we look at the transactions coming from that (client) bank and when you fear something is wrong you must file a 'suspicious' report. That's what we do."

Deutsche worked with Danske for eight years, Matherat confirmed, before ending the relationship in 2015 after suspect activities were uncovered at the Danish firm.

She added that as a correspondent bank, Deutsche carries out transactions amounting to "between 450 and 500 billion (worldwide) in terms of dollars only" each day, contrasting that figure with the US$150 billion of suspicious transactions over eight years at Danske.

AFP