Blow to the Nation’s largest lender as it tries to redeem its reputation
REUTERS- The German financial regulator BaFin has ordered Deutsche Bank to enact further safeguards to prevent money laundering, BaFin said on Friday, a blow to the nation’s largest lender as it tries to redeem its reputation.
In 2018, BaFin took the extraordinary step of installing the auditor KPMG as a special monitor at Deutsche to oversee progress on money-laundering controls.
Now, BaFin is expanding KPMG’s mandate.
BaFin said in a brief statement that it wanted improved controls particularly regarding “regular customer reviews,” applying also to correspondent banking and the monitoring of transactions.
Deutsche Bank said in a statement that it was improving its controls but “we are also aware that there is still work to be done.”
“The order is the result of a constructive supervisory dialogue with the BaFin and reflects that the bank continues to attach the highest priority to detecting and remedying possible weaknesses in control processes,” Deutsche Bank said.
“We are working intensively to also comply with the new requirements within the given timeframe,” Deutsche said.
Under the leadership of Chief Executive Officer Christian Sewing, Deutsche Bank has been trying to turn a new leaf by restoring profitability and its reputation after a string of misdeeds.
Last year, Deutsche Bank was sanctioned by New York regulators for ignoring warning signs while processing billions of euros of payments for Danske Bank, whose Estonian branch was embroiled in a money-laundering scandal.
BaFin said in a separate emailed statement that it sought to “bring about sustainable improvements in money laundering prevention at Deutsche Bank.”
The news comes on the heels of a good week for Deutsche.
It posted its best quarterly profit in seven years, following years of losses and its share price surged to the highest level in three years.
On Wednesday, the German’s biggest lender reported a 908 million euro ($1.1 billion) profit for the first quarter, buoyed by continued strong performance in its investment banking division.
The bank vastly exceeded analyst expectations for net income of 642.95 million euros, according to Refinitiv, and showed a marked improvement from the 51 million euro profit eked out in the fourth quarter of 2020.
The total first-quarter net revenues were 7.2 billion euros, compared to 6.35 billion euros for the same period in 2020.
“Common equity tier 1 (CET1) ratio a measure of bank solvency came in at 13.7 per cent, compared to 12.8 per cent for the first quarter of 2020. First-quarter loan loss provisions were 69 million, down 86 per cent from the 506 million in the first quarter of 2020,” stated the bank.
Return on tangible equity (RoTE) hit 7.4 per cent, up from 3 per cent in the same three months of last year.
