- Key insight: Of all the banks involved in the 2010s FX scandal, the German lender's consent order was the last to get dropped.
- Supporting data: The 2017 order had required Deutsche Bank to pay a $137 million fine, among other compliance measures.
- Expert quote: "Deutsche Bank secretly conspired with its competitors to rig the benchmark interest rates at the heart of the global financial system." — Former U.S. assistant attorney general Bill Baer
After nine years, Deutsche Bank is finally free of the last consequences from an Obama-era foreign exchange scandal.
The Federal Reserve announced Thursday that it has dropped its 2017 consent order against the German banking giant, which was among several banks accused of manipulating foreign currency interest rates in the mid-2010s.
That order had stuck Deutsche Bank with a $137 million fine and required a number of other compliance measures, including more stringent internal oversight and the provision of information and evidence to regulators. The Fed said the order was terminated on Aug. 14.
The central bank also hit Deutsche Bank with a separate consent order in 2017, charging a $20 million penalty for failing to comply with the so-called Volcker Rule, which bars banks from engaging in proprietary trading. That order was terminated in 2020.
Deutsche Bank declined to comment Thursday on the latest termination.
Germany's largest bank was one of several global lenders implicated in the FX scandal. In 2015, JPMorganChase, Citi, Barclays, UBS, the Royal Bank of Scotland and DB Group Services — a British subsidiary of Deutsche Bank — all
The wave of guilty pleas shocked the banking world. The Department of Justice alleged that from 2007 to 2013, foreign exchange traders at rival banks collaborated with each other in secret, often using online chat rooms, to alter benchmark exchange rates between dollars and euros for their own benefit.
"Deutsche Bank secretly conspired with its competitors to rig the benchmark interest rates at the heart of the global financial system," Bill Baer, assistant attorney general for the Justice Department's Antitrust Division, said in a statement at the time. "Deutsche Bank's misconduct not only harmed its unsuspecting counterparties, it undermined the integrity and the competitiveness of financial markets everywhere."
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In its 2017 order, the Fed accused Deutsche Bank of lacking adequate governance policies and failing to prevent "unsafe and unsound" practices by its foreign exchange traders — including in the multi-bank chat rooms.
"FX traders in the spot market at Deutsche Bank routinely communicated with FX traders at other financial institutions through chat rooms on electronic messaging platforms accessible by traders at multiple institutions," the Fed wrote.
These chats, the regulator said, included "attempts to influence contributions to submission-based foreign currency benchmarks … in order to possibly benefit Deutsche Bank."
As part of the enforcement action, Deutsche Bank was required to fire the traders involved in these activities and never retain them again in the future.
The consent order also noted that the bank had "fully cooperated" with the Fed and was improving its compliance systems.
The Fed's termination of the Deutsche Bank enforcement action appears to mark the end of the scandal's fallout. Of all the banks involved, the German lender's consent order was the last to get dropped; the other five banks saw their orders terminated between 2020 and 2023.
