Deutsche Bank to pay record £1.7 billion fine for Libor interest rate rigging scandal

Seven employees in London and Frankfurt to lose their jobs

Police cars in front of the head office of Deutsche Bank during an unrelated raid in Frankfurt am Main, Germany (FRANK RUMPENHORST/EPA)

Deutsche Bank has been hit with the biggest penalty of any bank yet for its role in rigging the Libor interest rate, which underpins trillions of dollars of financial contracts.

The Financial Conduct Authority imposed a penalty of £227 million - its largest ever for benchmark interest rate manipulation.

The City watchdog said the fine was so large because the lender misled it, which could have hampered its investigation.

But the FCA's fine was dwarfed by that of its American counterparts.

Three regulators, the Commodities Futures Trading Commission, the US Department of Justice and the New York Department of Financial Services ordered Deutsche Bank to pay $800 million, $775 million and $600 million, respectively.

Announcing the fine, the FCA said: “One division at Deutsche Bank had a culture of generating profits without proper regard to the integrity of the market. This wasn’t limited to a few individuals but, on certain desks, it appeared deeply ingrained.”

It went on: “Deutsche Bank’s failings were compounded by them repeatedly misleading us. The bank took far too long to produce vital documents and it moved far too slowly to fix relevant systems and controls.”

The allegations related to the bank's submissions for Libor - the London interbank offered rate - and its European counterpart Euribor between January 2005 and 2010.

The submissions are the daily estimates of the rates at which banks can borrow funds in the inter-bank market.

The FCA said at least 29 Deutsche Bank employees were involved in the rigging scheme, including managers, traders and submitters. They were mainly based in London, but also worked in Frankfurt, Tokyo and New York.

Deutsche Bank is the eighth financial institution to be fined by the FCA over Libor. Barclays, RBS, UBS, Rabobank, Lloyds and brokers ICAP and RP Martin have all been penalised as part of a massive global investigation into possible market rigging.