Economy

Alabama among states in $220 million Deutsche Bank settlement

The settlement followed an investigation led by the California and NY attorneys general, also involving authorities from 42 other states and the USA capital.

LIBOR is used to establish interest rates on all types of loans worldwide, which means the rate can impact municipal financial investments and bonds, adjustable rate loans, mortgages and student loans.

A USA court in March ordered a Deutsche Bank unit to pay $150 million as part of a global $2.5 billion Libor manipulation settlement reached in 2015 with authorities in Washington, London and NY state.

The attorneys general said that from as early as 2005 and continuing through the global financial crisis, Deutsche Bank made false or misleading Libor submissions, tried to influence other banks' submissions to benefit its own trading positions, and concealed the deception from customers.

Under the settlement's terms, entities with Libor-linked swaps or investment contracts with Deutsche Bank will be notified if they can receive distribution from a $213 million escrow fund. Employees also received communications from inter-dealer brokers and external traders attempting to influence Deutsche Banks LIBOR submissions. The manipulation inflated borrowing costs for scores of transactions. Specifically, these Virginia entities are getting a share of an overall $220-million settlement with Attorneys-General in 45 states after catching Deutsche Bank and others manipulating the "London Interbank Offered Rate" - or LIBOR.

Because of this, Deutsche Bank LIBOR submitters and management believed that Deutsche Bank's and other banks' LIBOR submissions did not reflect their true borrowing rates and that the LIBOR rates submitted by the banks did not reflect the actual borrowing costs, contrary to guidelines.

And in June the bank settled with other plaintiffs for $170 million over alleged manipulation of Euribor, a different lending average. Deutsche Bank paid $2.5 billion in penalties and disgorgements to resolve investigations in the U.S. and U.K. In July, the bank agreed to pay $77 million to resolve investor lawsuits in the U.S.

Deutsche Bank is the second bank to settle, and agreed to cooperate in the regulators' probe into possible misconduct by other banks. Last year, Barclays Bank PLC and Barclays Capital agreed to pay $100 million nationally, as part of a 44-state settlement.



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