In Case You Had Forgotten Why Deutsche Bank Is Writing A $2.15 Billion Check...

"I have a big favor to ask," "Strap on a pair," "I'm begging u pleaaaassseee": memorializing the Deutsche Bank Libor chats.
Author:
Publish date:

As you may have heard, earlier today Deutsche Bank agreed to pay $2.15 billion to settle allegations that its employees engaged in a whole lotta interest rate manipulation. Additionally, the firm plead guilty to criminal charges and "acknowledged that its internal monitoring systems were insufficient to prevent the manipulation of...Libor." So Deutsche is going to work on getting the latter up to speed and hop on cutting that 10-figure check, but before we put this tale to bed, a trip down memory lane is in order, courtesy of the best instant messages regulators went through to build their case.

They touch on:

* Favors, the big kind:

London MMD Manager: [Frankfurt Regional Manager], I have a big favor to ask you.
Frankfurt Regional Manager: Tell me.
London MMD Manager: And, uh ... a big, big, big favor.
Frankfurt Regional Manager: Ok.
London MMD Manager: Bon. In March ...
Frankfurt Regional Manager: Yes.
London MMD Manager: We have, eh, we have 20 yards of a 6 month fixing. [ . . . ] A
lot in in March. So, basically, um, basically, uh, we need
high 6 month.
Frankfurt Regional Manager: You need high 6 month, ok.
London MMD Manager: High 6 month, yes.
Frankfurt Regional Manager: Sure, we will get high 6 month, no worries.
London MMD Manager: High.
Frankfurt Regional Manager: We will get high 6 month.
London MMD Manager: Es . . . especially on the IMM, on the 19th I have 7 yards.

* Promises:

London MMD Manager: you're going to help me, promise me?????
Barclays Senior Euro Swaps Trader: ahaah of course, mate, it looks like it wants to move big time [ . . .]
London MMD Manager: seriously mate, are you really helping [London MMD Euro Trader]
Barclays Senior Euro Swaps Trader: I'm going to help her big time

* Getting down on one's knees in a $3,000 suit:

On 7 September 2006, Manager B reminded External Trader A: “I’m begging u pleassssssssssssssseeeeeeeeee I’m on my knees”. Manager B repeated his request: “can u beg the [Panel Bank 2] guy as well?” The External Trader replied: “ok I’m telling him”

* Balls:

New York U.S. Dollar Senior Trader: Oh bullshit…..strap on a pair and jack up the 3M. Hahahahaha

* Love:

The submitter at Panel Bank 1 replied: “no problem. I had not forgotten. The brokers are going for 3.372, we will put in 36 [3.36] for our contribution” External Trader A sent Manager B a copy of Panel Bank 1’s reply. Manager B replied: “I love you”

The Most Cringeworthy Chat Messages From The Deutsche Bank Libor Transcripts [Bloomberg]
Final Notice: Deutsche Bank [Financial Conduct Authority]
Examples of Misconduct from Written Communications [CFTC]
Deutsche Bank says no executives found to be aware of Libor misconduct [Reuters]

Related

RBS Trader Whose Instant Messages Clearly Show Him (Allegedly) Engaging In Libor Manipulation Not Going Down Without A Fight

One thing that most people probably agree on is that having their instant messages, e-mails, and phone calls end up court would be cause for at least a little embarrassment. Everyone's thrown in an emoticon they aren't proud of, some of us have used company time to chat with significant others about undergarments, and the vast majority of workers have spent a not insignificant amount of the workday talking shit about their superiors. Of course, the humiliation gets ratcheted up a notch in the case of people who 'haha' (and in extreme circumstances "hahahah') their own jokes* which, just for example, involve habitual Libor manipulation. Tan Chi Min knows what we're talking about: “Nice Libor,” Tan said in an April 2, 2008, instant message with traders including Neil Danziger, who also was fired by RBS, and David Pieri. “Our six-month fixing moved the entire fixing, hahahah.” And while having such an exchange become public would be tremendously awkward for most, you know what's really 'hahaha' about this whole thing is that 1) Tan was the one who wanted people to read the above, which was submitted as part of a 231-page affidavit earlier this month and 2) He's trying to use it as evidence that he didn't deserve to be fired. The conversations among traders at RBS and firms including Deutsche Bank AG illustrate how the risk of abuse was embedded in the process for setting Libor, the benchmark for more than $300 trillion of securities worldwide......Tan, the bank’s former Singapore-based head of delta trading for Asia, [is] suing Britain’s third-biggest lender by assets for wrongful dismissal after being fired last year for allegedly trying to manipulate the London interbank offered rate, or Libor. Tan, who 'allegedly' tried to manipulate the London interbank offered rate, also included this conversations as part of his defense: “What’s the call on Libor,” Jezri Mohideen, then the bank’s head of yen products in Singapore, asked Danziger in an Aug. 21, 2007, chat. “Where would you like it, Libor that is,” Danziger asked, according to a transcript included in Tan’s filings. “Mixed feelings, but mostly I’d like it all lower so the world starts to make a little sense,” another trader responded. “The whole HF world will be kissing you instead of calling me if Libor move lower,” Tan said, referring to hedge funds. “OK, I will move the curve down 1 basis point, maybe more if I can,” Danziger replied. And this: In another conversation on March 27, 2008, Tan called for RBS to raise its Libor submission, saying an earlier lower figure the bank submitted may have cost his team 200,000 pounds. “We need to bump it way up high, highest among all if possible,” Tan said. Tan also asked for a high submission in an Aug. 20, 2007, instant message to Scott Nygaard, global head of RBS’s treasury markets in London. “We want high fix in 3s,” Tan said in the message. “Neil is the one setting the yen Libor in London now and for this week and next.” Also this: “It’s just amazing how Libor fixing can make you that much money or lose if opposite,” Tan said on an Aug. 19, 2007, conversation with traders at other banks, including Deutsche Bank’s Mark Wong. “It’s a cartel now in London.” And this philosophical one, for good measure: “This whole process would make banks pull out of Libor fixing,” Tan said in a May 16, 2011, chat with money markets trader Andrew Smoler. “Question is what is illegal? If making money if bank fix it to suits its own books are illegal... then no point fixing it right? Cuz there will be days when we will def make money fixing it.” The defense rests. RBS Instant Messages Show Libor Rates Skewed for Traders [Bloomberg] *Although actually people who do this probably don't even have the good sense to be ashamed of themselves.