Deutsche Bank Suspends Employees for Manipulating LIBOR Rates

FRANKFURT – Two employees of Deutsche Bank were suspended after the company used external auditors to examine whether their personnel engaged in the handling of interbank lending rates. This was reported by the German magazine Der Spiegel, without citing sources.

The article claims that the bank received requests for information from U.S. authorities and EU in relation to the fixing of interbank rates. The bank’s spokesperson declined to comment on the report.

On Friday, sources privy to the matter told Reuters that the German market regulator began a special investigation on Deutsche Bank for suspected manipulation of interbank lending rates.

Researchers in the U.S., Europe, and Japan have examined more than a dozen major banks for alleged arrangements in the interbank rate LIBOR (London Interbank Offered Rate). Libor rates are used to determine interest rates for thousands of millions of dollars in contracts worldwide.

Barclays was the only bank to admit irregularities. Last week, the bank agreed to be fined with more than $450 million.

A spokesman for Metzler private bank, based in Frankfurt, said that one of their investment companies joined a number of lawsuits against banks in New York accused of manipulating the Libor rate.

“This is a standard procedure,” he said.

The Libor rate is actually a collection of fees generated for 10 different currencies and 15 different maturities ranging from overnight to one year.

Libor rates are set every business day through a process overseen by the British Bankers’ Association. To set the interest rate, a group of 7 to 18 major banks would be asked what interest rate one would have to pay to borrow money for a specific period and in a particular currency.

The answers are compiled by Thomson Reuters, which eliminates certain percentage of the highest rates and lowest before calculating averages and create Libor quotes.

In other parts of the world, interbank rates are calculated by similar processes.