Germany's largest lender Deutsche Bank AG mistakenly sent $6 billion to an American hedge fund client in June, Financial Times reported Monday. The error, which was resolved in a day, brought the investment bank’s operational and risk-control deficiencies under the scanner.
The incident happened at the bank’s London-based foreign exchange team where a junior member carried out the $6 billion trade while his boss was on holiday, Financial Times reported, quoting two people familiar with the matter. Rather than trading a net value, the worker incorrectly processed a gross amount, the report added. That meant the trade had “too many zeroes,” one of the people told the newspaper.
Deutsche Bank reportedly declined to comment on the issue.
Bank errors between $50,000 and $100,000 happen at times, a former senior trader at Deutsche Bank’s rival bank told the Wall Street Journal. These lapses can impact the market. However, it remained unclear whether the bank’s June error affected any currency prices.
The error has come to the public eye when the Frankfurt-based bank is marred with scandals that have triggered high-level management changes. Deutsche Bank said its investment bank will be divided into two units, and its asset and wealth management division will be split into separate entities.
In June, the bank’s two co-chief executives Anshu Jain and Juergen Fitschen resigned following missed profit targets and slip-ups, and were replaced by new co-CEO John Cryan. The bank is reportedly surrounded in about 6,000 legal cases and received a record $2.5 billion fine in May for its role in manipulating interest rates.