Deutsche sets aside €1.5bn as Libor settlement looms

Deutsche Bank will take a litigation charge of "approximately €1.5bn", it said on Wednesday as the German lender nears settlement of claims that it tried to manipulate interbank lending rates.

A resolution of the long-running saga could come as early as Thursday, and the bank's total fine is likely to be more than €2bn, according to people familiar with the situation.

That total would represent the largest penalty meted out so far in connection with the scandal over the manipulation of the London interbank offered rate (Libor) and other interbank borrowing rates.

Deutsche's fine is expected to be pushed up by the involvement of New York's Department of Financial Services, which has not taken part in Libor-related settlements with other banks.

Previously, the largest fine had been levied on Swiss bank, UBS, which paid $1.5bn to US, UK and Swiss authorities in 2012.

Deutsche is also seeking to settle with the US Department of Justice, the Commodity Futures Trading Commission and the UK's Financial Conduct Authority, according to people familiar with the situation. BaFin, the German regulator, is not involved.

A settlement of Libor would remove one of the longest-standing uncertainties hanging over Deutsche.

The bank has terminated the contracts of, or disciplined, 21 people as a result of its own investigation into the affair, and has already paid a €725m fine levied by the European Commission for allegedly rigging yen Libor and Euribor, the Brussels-based benchmark.

The settlement also comes at the beginning of a criticial few days for Germany's biggest lender.

Its supervisory board is due to meet on Friday to discuss an overhaul of its strategy, which could see it sell off the Postbank business it bought in stages from 2008.

And on April 28, its co-chief executive, Jurgen Fitschen is due to stand trial in Munich along with other former Deutsche officials on charges relating to a long-running dispute over the bankruptcy of the Kirch media empire.

Deutsche said despite the litigation charge, it would be profitable in the first quarter and was set to report near record revenues. Like other big investments banks, it is expected to profit from improved trading conditions. The bank is due to provide detailed results next week.

Additional reporting by Gina Chon in Washington

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