Deutsche Bank is nearing a record settlement topping $1.5 billion to resolve the German banking giant’s alleged role in manipulating a global financial benchmark.
Bank officials are in talks with federal prosecutors, British and U.S. regulators and New York’s financial services regulator over evidence that Deutsche Bank traders tried to manipulate the London Interbank Offered Rate, a person familiar with the discussions said Thursday.
The resolution could be reached as soon as this month and is expected to include a criminal guilty plea by a Deutsche Bank subsidiary in the United Kingdom, said the person, who spoke on condition of anonymity because there has been no authorized public discussion of the continuing negotiations.
In a Thursday news account, The New York Times reported that Deutsche Bank said it was continuing “to work with the authorities that are reviewing interbank offered rates matters.”
The pending agreement represents the last major unresolved bank investigation involving the global financial standard popularly known as Libor. Set by the London-based traders of major banks, Libor is used to set rates on trillions of dollars of loans, credit cards and some complex financial derivatives.
Major U.S. and overseas banks collectively have been hit with billions of dollars in penalties over the Libor rate-rigging scandal. Several former banks traders have also been personally charged by authorities in the U.S and Great Britain.
The financial penalty under negotiation with Deutsche Bank, Germany’s largest financial institution, would top previous Libor-related resolutions, including the $1.5 billion settlement Swiss banking giant UBS reached with international regulators in Dec. 2012.
Although Libor rate-setting may seem arcane outside of banking circles, the rate-rigging potentially affected millions of consumers who paid financial rates that were artificially high or low.
Deutsche Bank is among several major banks targeted in a civil class-action lawsuit over their alleged roles in the Libor scandal. The multi-district federal case was filed by U.S. municipalities and financial funds who argue they suffered financial damages by receiving lower interest rates on transactions as a result of the suspected manipulation.
The banks have are pursuing a motion to dismiss the lawsuit on grounds that they are legally subject to lawsuits in their home countries, not cases filed in U.S. courts.