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Deutsche Bank has been able to misapply foreign currency to more than 50 companies in Spain, highlighting the magnitude of the turmoil that has led to the emergence of two major banks and more than previously thought, according to people familiar with the matter.
Germany’s largest bank launched a mid-term investigation last year after customers complained of being sold some intricate items that they did not understand.
The study, known as Deutsche Bank as Project Teal, was first unveiled by the Financial Times earlier this year. At the time, the bank said “fewer customers” were affected.
The bank is currently investigating cases of between 50 and 100 companies that may be at risk, according to people who are well aware of the issue, although it is not known how many have lost money.
J García-Carrión, Europe’s largest wine retailer, paid € 10m to Deutsche Bank to settle a dispute over losses that the Spanish company suffered. FT also reported last month.
The size of the survey was first reported on Thursday by Bloomberg, who said the Palladium Group, based in Ibiza, one of the largest companies in Spain, was also wrongly traded for money and evaluated options.
“We can confirm that we have encountered such incidents in J García-Carrión and we are planning cases in London,” said Palladium, not to mention the amount of losses or the amount of work done.
In a statement, Deutsche confirmed that the investigation into the allegations was ongoing, but declined to comment on the allegations. “We follow up on all the evidence and look closely at the possible activities,” he added.
Project Teal is focused on selling hedges, swaps, peripherals and other complex financial items. Backlogs are listed as a cheaper way to prevent financial disclosures than for short-term exchange insurance.
According to people familiar with the matter, the study revealed that corporate clients were wrongly selected according to companies in the Financial Instruments Directive (Mifid), an EU law requiring banks to segregate customers based on the size of their assets.
FT also reported last month that the departure of two former Deutsche Bank executives was linked to this. The lender announced in early June that Louise Kitchen, head of Deutsche’s subsidiary branch, and Jonathan Tinker, the world’s leading foreign exchange manager, had both resigned and left the bank.
Two businessmen who had the responsibility of overseeing the crisis have already left the bank.
Deutsche Bank is not the only loan that appears on its foreign exchange reserves. J García-Carrión is also battling Goldman Sachs in the London High Court for more than $ 6.2m in losses linked to foreign exchange.
Separately, JGC alleges that the French BNP misappropriated billions of dollars and lost tens of millions. The BNP says it is complying with all regulations relating to the sale of peripherals and foreign weapons.
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