Deutsche Bank individuals investigated over Libor scandal

Prosecutors’ inquiry the first step in a procedure that could lead to criminal charges

Frankfurt prosecutors are examining the role played by individuals connected with Deutsche Bank’s involvement in the Libor rate-rigging scandal – potentially opening up a new front in the affair that has rocked Germany’s biggest bank. The investigation is the first step in a procedure that could lead to criminal charges.

The prosecutors' investigation stems from a report by the German financial watchdog BaFin, details of which were revealed by the Financial Times on Friday. BaFin's report painted a damning picture of the failings that lay behind Deutsche's involvement in the rate-rigging affair.

Nadja Niesen, senior prosecutor, said: “I can confirm that a corresponding preliminary investigation is pending here. Those suspected are all represented by lawyers and are also aware of the process. How things proceed depends on the evaluation of the BaFin report, which has only recently been received.”

This development adds to Deutsche Bank's woes, just as outgoing joint chief executive Anshu Jain prepares to hand the reins to successor John Cryan.

Deutsche recently reached a record $2.5 billion settlement with regulators over Libor rigging allegations. But other scandals still hang over it, including claims that it was part of industry-wide attempts to manipulate foreign exchange rates.

Mr Jain’s departure has unsettled some senior colleagues within the investment bank, which he helped build over the past 15 years. On Monday, it emerged that Henrik Aslaksen, global head of mergers and acquisitions, was leaving Deutsche.

BaFin's Libor report, which has been seen by the FT, says that Deutsche's senior management allegedly acted "negligently" over the fixing of Libor rates and that Mr Jain may have "knowingly made inaccurate statements" to the Bundesbank, Germany's central bank, in relation to the affair.

Other senior managers within the investment bank are also criticised in the BaFin report.

Mr Jain, who is due to step down as Deutsche’s co-CEO on Tuesday, has dismissed as “baseless” the allegation that he misled the Bundesbank.

Deutsche said that Mr Jain had understood the Bundesbank’s questions about when he first learnt of rumours of the scandal refer only to rigging at Deutsche, which he learnt of in 2011 – not rigging in the market place, which was reported in 2008.

(Copyright The Financial Times Limited 2015)