In deeper Deutsche Bank processed €31 billion more of “questionable funds” for Danske Bank than previously thought, on top of the $150 billion that it cleared for Danske’s tiny Estonian branch between 2007 and 2015, the Financial Times reports. “This means that in total, Deutsche Bank processed four-fifths of the €200 billion Danske has identified as flowing through its Estonian branch from clients from Russia and other former Soviet countries.”
Deutsche Bank AG signage sits on the facade of a branch above a no entry sign, in Hamburg, Germany, on Saturday, Feb. 13, 2016. Deutsche Bank plans to buy back about $5.4 billion of bonds in euros and dollars as it seeks to allay investor concerns about its finances. Photographer: Krisztian Bocsi/Bloomberg
Krisztian Bocsi/Bloomberg
“The revelation heaps more pressure on Deutsche Bank, which is facing scrutiny from authorities on both sides of the Atlantic on a number of fronts, from investigations stemming from the Panama Papers scandal, to an unresolved issue with U.S. prosecutors over its own role in helping Russian clients to move large amounts of money out of the country.”
With its shares trading near all-time lows, Deutsche’s chief financial officer tried to reassure investors following a separate problem, last week’s raids on the bank’s headquarters in Frankfurt by German authorities investigating the so-called Panama Papers case. CFO James von Moltke said the bank’s “financial targets remain unchanged, meaning it still expects to make a profit this year for the first time since 2014. He said the bank’s capital and liquidity positions are strong, reflecting Deutsche Bank executives’ repeated need to reassure clients and investors about the lender’s fundamental soundness.”
Wall Street Journal
Leapfrogging the banks Walmart and Target are urging the Federal Reserve to develop a service to settle debit card transactions in real time. “Such a service could ultimately eliminate the lag between when consumers use debit cards to pay for items and stores receive the funds,” which now typically takes one to three days. “Action by the Fed could enable merchants and others to develop faster payment services that allow consumers to pay for items from their checking account without using existing debit-card rails. This could become a problem for Visa and Mastercard, which could lose transaction volume if such alternative payment methods take off, and card-issuing banks, which reap fees from retailers when shoppers use debit cards to pay for purchases.”
Eyes wide open An anti-money-laundering and sanctions controls officer at HSBC was a key in the arrest of big Chinese tech company Huawei Technologies' chief financial officer. Meng Wanzhou was arrested in Vancouver at the request of American authorities for allegedly doing business with Iran. Her arrest was blamed for Thursday’s sharp downturn in stocks. The HSBC official flagged suspicious transactions in Huawei’s accounts and alerted U.S. prosecutors.
Elsewhere
Not good enough The Federal Reserve “has rejected Wells Fargo’s plans to prevent further consumer abuses and told the scandal-plagued lender it needs stronger checks on management,” Reuters reports. “The concerns raised by the Fed, which have not been previously reported, are likely to increase the time it takes the central bank to lift an asset cap it imposed on Wells Fargo in February following a string of sales practices scandals.”
American Banker's Kevin Wack notes, "a second regulatory agreement that the scandal-plagued bank signed earlier this year — a consent order with the Office of the Comptroller of the Currency — has drawn far less attention, even though it may also prove to be highly consequential."
Quotable
“To date, we’re not aware of any wrongdoing on our part.” — Deutsche Bank CFO James von Moltke, commenting on the raids on the bank last week by German prosecutors.
After buying the failed Silicon Valley Bank, the Raleigh-based regional joined a growing number of banks fighting to serve Boston's tech startups, life sciences entrepreneurs and fund investors.
Now that the Consumer Financial Protection Bureau has refused to request funding from the Federal Reserve System, many experts see the case making its way to the Supreme Court.
The two regional banks, which are combining in a merger of equals, had previously said they expected to complete the deal sometime in the first quarter of 2026.
The bank is a step closer to having its own U.S. dollar-pegged cryptocurrency. It could become the first major financial institution to issue a stablecoin.
Recent high-profile ethics violations by senior Federal Reserve officials, including new revelations concerning stock trades by former Fed Gov. Adriana Kugler, have sparked debate over the effectiveness of the central bank's oversight, even as some observers stress such cases remain rare.
The Swedish financial technology firm issued its first stablecoin and signed a gift card distribution deal with BlackRock. Also, EMVCo is examining AI's impact on processing and more in the American Banker global payments and fintech roundup.
