BaFin, the German regulator, has fined Deutsche Bank €23M for failing to promptly investigate currency derivative infringements in Spain and regulatory breaches at Postbank.
The Federal Financial Supervisory Authority (BaFin) has issued Deutsche Bank with a fine of €23.05 million breaching regulatory rules. It took action against the bank after it was found to be in violation of its obligations under German financial law.
BaFin concluded that Deutsche Bank AG failed to swiftly investigate and address issues linked to the distribution of derivatives in Spain. As a result, this led to enforcement action by the National Securities Market Commission (CNMV), a Spanish government agency.
Other failings relating to Postbank, a Deutsche Bank subsidiary, were also penalised by the German financial watchdog. The company was fined for failing to meet its obligations to properly record telephone conversations during investment advice sessions.
While temporary exceptions were in place during the pandemic, they had since expired, meaning Postbank was found to have breached recording requirements under the Payment Accounts Act (ZKG). In addition to this, the company failed to process numerous account switching applications under the ZKG, or did so with significant delays.
How much were the fines?
Deutsche Bank was fined a grand total of €23.05 million by BaFin, divided into three parts. It was required to pay €14.8 million for the derivatives sales violations, €4.6 million for the telephone recording breaches, and €3.65 million for infringements relating to the switching service.
Has Deutsche Bank responded?
Deutsche Bank has accepted BaFin’s ruling, adding that it has implemented measures to enhance its internal controls and processes. While the fine is a relatively modest one for Germany’s largest bank, it increases the pressure on CEO Christian Sewing, who is working to improve both the bank’s compliance and restore its overall reputation.
As for BaFin, its ruling on Deutsche Bank is final and legally binding, serving as a reminder to institutions that breaching regulatory rules will result in financial penalties. In a statement, the regulator said that investment firms must adopt proper organisational measures to ensure effective service provision and “minimise delays” in addressing issues during business disruptions.
Has Deutsche Bank been fined before?
Yes, Deutsche Bank has received numerous high profile fines in recent years. In 2017, the UK Financial Conduct Authority (FCA) fined the company £163 million for anti-money laundering (AML) failures. At the time it represented the largest financial penalty for AML controls failings ever imposed by the FCA, or its predecessor the Financial Services Authority (FSA).
Meanwhile, back in 2023, the US Federal Reserve Board announced enforcement action against Deutsche Bank, its New York branch, and other US affiliates. The Board issued a consent order and a $186 million fine based on “unsafe and unsound practices and violations of the Board’s 2015 and 2017 consent orders”.
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