FRANKFURT: Deutsche Bank AG halted bonus payments to a group of employees while examining whether they improperly traded with the firm.
“We are reviewing a transaction that may have involved unacceptable conflicts of interest,” the Frankfurt-based company said in an e-mailed statement, without identifying past or present staff involved. “We will take disciplinary measures where appropriate and review further our controls to minimize the chance of a re-occurrence.”
The internal review focuses on Deutsche Bank’s efforts in 2009 to profit from differences in prices of credit indices and the underlying debts that compose them, according to a person with knowledge of the situation.
Six employees participated in their personal accounts alongside an external hedge fund, the person said.
The bank began scrutinizing the trading last year after it was flagged amid a broad push to reduce leverage, the person said.
Internal auditors estimate the current and former employees made about US$37 million on the transactions, the Wall Street Journal wrote in a report on Thursday.
A former senior executive in the group may stand to reap US$9 million on an about US$1 million investment, the newspaper said.
It cited a spokesman for the banker as saying he had “fulfilled all appropriate compliance procedures, been entirely transparent at all times and denied any wrongdoing.”
Auditors have not determined whether Deutsche Bank lost money once related transactions are considered, the Journal cited an unidentified person briefed on the matter as saying.
However, excluding such ancillary revenue, a preliminary assessment shows the deal might have cost the firm more than US$60 million, the publication said.
The bank’s investigation also examines the original rationale and approval process for the transaction, as well as how the deal was supervised, the person said.
“Based on our findings to date, we believe that no client was disadvantaged by this transaction,” Deutsche Bank said in a statement.
