If you’re looking for a novel infraction for which to fine Deutsche Bank, you might be looking for a long time. The Germans, after all, have been sanctioned for pretty much every imaginable illicit action a bank could take: rate-rigging, mortgage-backed securities shenanigans, fraudulent dark pool practices, money-laundering mirror trades for the Russians, Volcker rule violations, nepotism, suspicious lacks of suspicious-activity reports, compliance calamities. A levy for Malaysian malfeasance certainly can’t be far away, either. So you’ve got to get creative if you want to break new ground in this well-trodden space. So given the opportunity to come down hard on the Deutsches for pampering a pedophile, you can be sure the New York Department of Financial Services isn’t going to miss it.
The investigation… could result in an enforcement action against Deutsche Bank as soon as this month, before the first anniversary of Mr. Epstein’s arrest on federal sex-trafficking charges….
The investigation focuses, at least in part, on the bank’s decision to continue doing business with Mr. Epstein even after employees raised concerns, according to the people. Compliance officers in the bank’s anti-money-laundering operation alerted the federal government to several transactions in which Mr. Epstein sent money overseas in 2015, while employees worried about the reputational risks of doing business with a registered sex offender. Ultimately, senior bank executives opted to maintain the relationship with Mr. Epstein because it was so lucrative.
In addition to setting up dozens of accounts for Mr. Epstein, Deutsche Bank served as his lender from 2013 until last year, even as other banks considered him off-limits.
Neiman Marcus Group Inc. denied violating the terms of a loan from top-ranking lender Deutsche Bank AG , saying it has $100 million more cash on hand than projected because sales have been better than expected…. Neiman said in response that generating more cash than expected has, in turn, lowered the level of inventories backing the Deutsche Bank loan. The company said it would use cash to replenish inventory back to levels required under the loan.
DB people have been arriving at the French bank, but not necessarily in the numbers expected…. Instead of sales or trading, insiders many of the people who've migrated to BNP Paribas from DB instead work in technology, with DB's tech systems seeming to be the real focus of BNP's purchase….
Insiders sugggest many Deutsche people are unwanted. Some, like Tom Campbell, went early to Cowen in London. Michael Barisonek left for YK Asset Management in January, Jennifer Xu became a portfolio manager at GIC in May. "There wasn't an obvious landing place for a lot of traders because BNPP already had people in similar roles," confesses one insider…. "I spent my career on Deutsche's equities desk," says a DB source. "And then, last year I watched it get decimated. Traders were given a vague promise of an offer from BNP Paribas, but nothing concrete and people were openly interviewing elsewhere. Very few people made it across in New York."
It all adds up to a pretty grim picture. Just how grim, you ask?
Daniel Hunter, a Deutsche Bank spokesman, said the bank regarded its reputation as its “most precious asset.”
Oh my God, things are even worse at Deutsche Bank than we thought.
Regulators May Punish Deutsche Bank for Its Jeffrey Epstein Ties [NYT]
Neiman Marcus Denies Breaching Terms of Deutsche Bank Loan [WSJ]
Deutsche Bank equities professionals try to settle at BNP Paribas [efinancialcareers]