It has been revealed that this summer, the German bank mistakenly paid $6 billion to a hedge fund client and the incident has meant that Deutsche Bank is yet again being scrutinised by regulators.
The Financial Times reports that the foreign exchange trade was processed by a junior member of staff and instead of processing the net value, the gross figure was processed. “The $6bn error raises questioned about why it was not spotted under the bank’s “four eyes principle”, requiring every trade to be reviewed by another person before being processed,” the FT reported.
Despite errors such as these being uncharacteristically common, one of this scale is rare and as required, it was reported to the US Federal Reserve, the European Central Bank and the UK Financial Conduct Authority.
Last weekend, Deutsche Bank announced the splitting of the bank in two and the resulting change around of staff, as the institution struggles to re-establish the reputation and revenue it once had.
New CEO as of July, John Cryan, has continuously reiterated the importance of tightening bank culture and improve processes so that they are compliant with regulator’s needs and insiders within the bank blame the failure in this year’s US stress test on this reason, according to the FT.
“Our cost base is swollen by poor and ineffective processes, antiquated and inadequate technology, too many tasks being completed using manual labour and, too frequently, unsuccessful investments in our infrastructure,” Cryan explained in a memo to staff in July.
Alongside this, Deutsche is attempting to deal with investigations surrounding the money laundering in Russia, the Libor interest rate rigging and breaking US sanctions.
A decline in the return on capital employed of globally listed companies over the last decade has been noted in recent EY and PWC reports. This is despite businesses taking an increased focus on balance sheets since the financial crisis in 2008.
Europe’s opening banking regulation is finally here. After months of preparation across the continent, the Revised Payment Services Directive comes into effect on January 13.
The revised Payment Services Directive regulation, regarded as one of the most disruptive in Europe’s financial services sector, will begin to make an impact on January 13, 2018.
The cost of compliance efforts for banks has increased exponentially in recent years. This is especially true for those banks that are active in the global trade finance domain, where the overwhelming expectation is for compliance requirements to become even more complex, strict and challenging over time.