Deutsche Bank AG agreed to pay 45 U.S. states a combined $220 million to resolve a probe into interest-rate manipulation, more than twice the amount of Barclays Plc’s settlement last year.
The states’ investigation found that the German bank’s false rate submissions inflated borrowing costs linked to the London and U.S. dollar interbank offered rates, which are used to value trillions of dollars of securities and loans, New York Attorney General Eric Schneiderman said Wednesday in a statement.
The accord is the latest development in probes by governments across the globe into banks’ manipulation of benchmark interest rates, one of the key scandals that led to a cultural overhaul of the industry over the past decade.
Global fines have topped $9 billion. Deutsche Bank paid $2.5 billion in penalties and disgorgements to resolve U.S. and U.K. investigations, and a unit pleaded guilty to wire fraud in connection with its role in the scandal. In July, the bank agreed to pay $77 million to resolve investor lawsuits in the U.S.
"Deutsche Bank employees and management knew or had strong reason to believe that Deutsche Bank’s and other panel banks’ Libor submissions did not reflect their true borrowing rates," according to the statement.
The bank admitted to allegations about how traders and managers engaged in the manipulation on an almost-daily basis from 2005 to 2009, according to the settlement.
“We will not tolerate fraudulent, manipulative or collusive conduct that interferes with or undermines confidence in our financial markets,” Schneiderman said in a statement.
Deutsche Bank’s traders also attempted to influence other banks’ Libor submissions to benefit trading positions, Schneiderman said. The practice defrauded government entities and nonprofits as well as the bank’s counterparties, according to the statement.
Submission by a panel of 16 banks were supposed to reflect borrowing rates in the interbank market, and a daily Libor rate was calculated by averaging the middle eight submissions.