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Deutsche Bank Settles Money Laundering Probe with the Fed

Zacks Equity Research

On Tuesday, Deutsche Bank AG DB reached a settlement with the Federal Reserve regarding the lack of adequate monitoring of transactions between 2011 and 2015 in its U.S operations.

The bank is required to pay $41 million for its failure to comply with the Bank Secrecy Act and anti-money laundering laws. Further, a cease-and-desist order was enforced on the bank. The Federal Reserve has also asked the bank to improve supervision by its senior management in relation to money laundering.

The settlement concludes the investigation on the mirror trades done between 2011 and 2015, in which the bankers bought Russian shares and sold the same in London, effectively converting rubles into dollars amounting to about $10 million. Though the Federal Reserve did not disclose any improper transaction, it found insufficient monitoring of the transactions by the bank.

Deutsche Bank addressed the Federal Reserve in an emailed statement, stating that it will abide by the remedial measures ordered by the regulator. Also, it promised to meet its expectations by improving the controlling measures.

A number of regulators have investigated the bank on this matter. So far, it has reached settlement with the U.K. and New York State’s Department of Financial Services, paying penalties of about $630 million. However, the scrutiny by U.S. Department of Justice is ongoing.

Deutsche Bank’s shares have gained 11.8% in the last six months, outperforming the 11.6% growth for Zacks categorized Banks - Foreign industry.

Currently, the bank carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space include Bank of N.T. Butterfield & Son LTD NTB, KB Financial Group Inc. KB and UBS Group AG UBS.

Bank of N.T. Butterfield & Son and UBS Group carry a Zacks Rank #2 (Buy), whereas KB Financial Group Inc. sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Bank of N.T. Butterfield & Son’s earnings estimates were revised upward by 2.1% for the current year, in the past 30 days. Also, its share price jumped 15.4%, over the last six months.

UBS Group witnessed a 5% upward earnings estimates revision for the current year, in the past 30 days. Moreover, its shares gained 0.25% in the last six months.

KB Financial’s current-year earnings estimates were revised 13.5% upward, over the last 30 days. Further, its shares increased 34.0%, in the last six months.

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