The sudden departure of two veteran executives of Deutsche Bank is linked to an ongoing investigation into the alleged incorrect sale of foreign exchange derivatives to corporate clients in Spain, people familiar with the case told the Financial Times business.
On Tuesday the largest German bank informed staff that Louise Kitchen, head of Deutsche’s asset liquidation unit, and Jonathan Tinker, co-head of world exchange, both resigned and left the bank.
The departures were announced in memos to staff seen by the Financial Times and reported earlier by Bloomberg. Deutsche Bank did not disclose the reasons for the departures, two of several management changes announced Tuesday.
People familiar with the details told the Financial Times that the resignations of Kitchen and Tinker, who have both worked at Deutsche Bank for more than 15 years, have been linked to Project Teal – a internal investigation in alleged incorrect sale of foreign exchange derivatives that have been pushed some small businesses in Spain in financial difficulty and led to a series of settlements outside the court.
The probe is one of numerous compliance issues that overshadows the tenure of executive director Christian Sewing, who has been in charge of Deutsche Bank since April 2018 and has promised to improve the lender’s internal control mechanisms.
However, BaFin was German financial guardian in April blue Deutsche Bank has tightened its anti-money laundering safeguards while extending and extending the mandate of a special representative parachuted into the bank in 2018 to monitor the lender’s progress in tightening its internal controls. Deutsche said at the time that it had “significantly improved” its controls.
In March, Deutsche’s legal director Stefan Simon was put in charge of the anti-financial and compliance unit – areas that were previously controlled by the head of the risk office Stuart Lewis, who will leave the bank in 2022. The lender has subsequently appointed a new world leader in anti-financial crime.
The FT revealed in January that Deutsche was investigating whether its staff had mis-sold sophisticated investment banking products to customers in breach of EU rules and then collaborated with individuals from these companies to share profits.
Two employees who were operationally in charge of the potentially problematic activities have already left the bank. Now two executives who have overseen the business unit where sales are going are leaving as well. Süddeutsche Zeitung first wrote about the link between Project Teal and departures.
Deutsche Bank declined to comment.
“Thank you.” [Kitchen] for his contribution to the rapid creation and success of the [Capital Release Group] to help transform our bank, and for its work for more than 15 years in senior positions across all of the bank’s trading platforms and to cover corporate and institutional customers, ”wrote Rebecca Short, Deutsche’s transformation director at a note to the staff.
Ram Nayak, Deutsche’s world head of fixed income, said in a separate email that Tinker “played an important role in the development of our FX business, and thanked him for his contribution to the franchise”.
Kitchen and Tinker did not respond to FT requests for comment.
The Project Teal probe was sparked by customer complaints and found that Deutsche had erroneously classified customer companies into Mifid rules – the Markets in Financial Instruments Directive.
These require banks to separate customers for levels of financial sophistication, such as retail investor, professional investor or counterparty, i.e. another bank or financial institution.
Deutsche believes some of its staff knowingly sell inappropriate or inappropriate products to customers who may not have been able to understand and shoulder the risk they were taking with these positions, say people familiar with the probe. The lender not only keeps a few isolated cases, but what appears to be a broader pattern of misconduct over several years,
One of them said the issue was “toxic” to Deutsche Bank.
Earlier this year, the lender said it had “initiated an investigation into our engagement with a limited number of customers,” adding that it could not comment on the details as the probe continued.