The Federal Reserve has secretly told Deutsche Bank AG that its compliance plans are not in line with the law, indicating that the bank has been hit by a scandal that has failed to comply with previous agreements with U.S. regulators, according to people familiar with the matter.
The Fed's latest warning came to an annual regulatory review in which Deutsche Bank did not improve its risk management practices despite having secret agreements with the central bank to address the problems, people said. The checklist contains leaders from German banks who are preparing for possible sanctions, including the possibility of a large fine, said one person who was briefed on the matter.
The Fed's latest advice is the reinstatement of Chief Executive Officer Christian Sewing, who has been actively working to improve relations with Deutsche Bank and bankers following a turbulent period in which the lender stumbled from one crisis to another. Now he has a new problem to overcome - and it could be bigger.
Deutsche Bank spokesman Dylan Riddle said the company did not comment on any communication it had with regulators. A Fed spokesman also declined to comment.
Deutsche Bank has a lot of dust and regulators in the U.S. - including violations of foreign exchange and liability for money laundering offenses. The lender has also been the subject of a number of Fed orders on how the company manages risks, and the company's efforts to adjust its controls have not convinced the agency that the bank's problems are behind it, people say.
In a move that showed the company was focused on compliance issues, Deutsche Bank last week nominated Joe Salama, a former US-based adviser, to become the world's chief financial officer and chief financial officer. He succeeded Stephan Wilken, who has been in office since October 2018.
While negotiations with the Fed regarding further actions by Deutsche Bank are in their early stages, the bank has faced similar disagreements with the company in recent years and has been fined. These penalties include $ 137 million in respect of allegations that merchants are holding cash terms and a $ 41 million fine for illegal money laundering.
In addition to the Fed's scrutiny, there are indications that Deutsche Bank has improved its risk management, at least in some areas. The company emerged in the March collapse of Archegos Capital Management unscathed, while other banks doing business with Bill Hwang's family office lost more than $ 10 billion combined.
Posts
