Everyone has a different way of dealing with the Volcker rule. Citigroup said fuck it, we're out. Goldman said fuck that, we'rein. Pretty much everyone asked for a little more time, pretty please. But Deutsche Bank has truly set itself apart. Back in April the bank became the first to disgorge cash over Volcker violations, a feat in itself. Now it looks like John Cryan might have to ready the settlement-signing check once again, following a little $60 million trading snafu:
The trade used derivative products tied to U.S. inflation, said the people, who requested anonymity because the details aren’t public. The Frankfurt-based lender has been examining whether Deutsche Bank traders breached risk limits on the deal, some of the people said. The case has been escalated to the bank’s supervisory board, one person said.
Of course, $60 million isn't exactly going to break the bank. But neither is it a drop in the bucket. Add in the extra scrutiny on Deutsche Bank given its prior violations and ongoing inability to go more than a few weeks without slipping on a metaphorical banana peel and watching a few million dollars slip out of its pockets, there's no way this will be the last we hear of the bad inflation bet.
The only surprising thing is that there wasn't more money involved, or something more interesting than TIPS. If we're going to have to talk about Deutsche Bank unexpectedly torching millions of dollars on a wrongheaded derivatives bet, can't it be some bespoke tranche opportunity or weird collateral thing? TIPS are no way to lose $60 million.