Deutsche Bank is allegedly bracing itself for a $1bn fine from U.S. and U.K. authorities after it was accused of manipulating two of the world's most important interbank lending rates, Libor and Euribor.
According to sources, cited by Reuters, Germany's largest lender is on the cusp of striking the deal with the U.S. Department of Justice and the Financial Conduct Authority, after already spending $7.7 billion on litigation to deal with the allegations over the past two years.
"People are doing everything to get this issue off of the table by the end of the year," the source told Reuters.
Deutsche Bank declined to comment.
Libor valuations directly influence the value of trillions of dollars of financial deals between banks and other institutions.
The benchmark reference rates are used in euro, U.S. dollar and British sterling over-the-counter interest rate derivatives contracts and exchange-traded interest rate contracts.
In December 2013, the European Union fined eight banking giants - Barclays, Deutsche Bank, Société Générale, the Royal Bank of Scotland, UBS, JPMorgan, Citigroup and RP Martin - a combined total of €1.71 billion ($2.15 billion) by the European Commission for rigging the key benchmark interest rates Libor and Euribor.
The EU said the banks were part of two separate illegal cartels that conspired to manipulate Euribor and Libor to benefit their own positions in euro and Japanese yen-denominated interest rate derivatives markets.
Barclays was the first bank to settle with U.S. and U.K. authorities over Libor-fixing allegations, followed by RBS, UBS, brokerage Icap, and Rabobank.