An incident with many zeroes at the London-based Forex desk of Deutsche Bank AG (FRA:DBK) has added to concerns about risk and operational controls at the investment giant.
According to a report by the Financial Times, the bank paid whooping $6 billion to a hedge fund client by mistake in June 2015.
People familiar with the matter said that the trade was processed by a junior member of the bank’s Forex sales team. The person in question processed a gross value instead of net.
The error, which was reported to to the US Federal Reserve, the European Central Bank and the UK Financial Conduct Authority, raises the question on why the bank did not apply the principle of every trade being reviewed by one more person before getting processed.
Furthermore, Deutsche Bank is already under fire over poor controls. The bank is embroiled in several scandals, including alleged breaching of US sanctions against Iran, Libor rigging and money laundering in Russia.
John Cryan, who became as co-CEO of Deutsche Bank in July, has noted the need to enhance the bank’s culture and to work to improve relations with regulators. The bank is seeking to streamline its structure by dividing the investment banking business into a securities trading unit, to include the Forex desk, and a corporate finance unit that will include the global transaction banking operations.