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Bosses to blame for Deutsche Bank crisis: Gabriel

The crisis engulfing Deutsche Bank is the fault of the company's own management, German Economy Minister Sigmar Gabriel has said.

Bosses to blame for Deutsche Bank crisis: Gabriel
Sigmar Gabriel on his way to Iran for a trade visit. Photo: DPA
The problems at bank, which has been slapped with an unaffordable $14 billion fine by the US Department of Justice for its role in the subprime mortgage crisis, were the fault of “irresponsible” bosses, Gabriel said. 
 
“I don't know whether to laugh or cry that the bank, which turned speculation into a business model, is now calling itself a victim of it,” Gabriel told reporters, after CEO John Cryan this week blamed speculators for pushing the embattled lender's share price to a record low.
 
 
Speaking to reporters on his way to Tehran for a trade visit, Gabriel said Deutsche's woes could be traced back to past mistakes made by the management.
 
“The scenario is that thousands of people will lose their jobs. They now have to bear the responsibility for the madness carried out by irresponsible managers,” said Gabriel, who is also Germany's vice-chancellor and leader of the Social Democrats, the junior partner in the coalition government.
 
Deutsche Bank has found itself at the centre of a storm ever since the US Department of Justice last month demanded an unaffordable $14 billion fine over the bank's role in the subprime mortgage crisis. Fears over Deutsche's financial health and speculation that it might need a bailout sent its shares plummeting this week.
 
Its stock recovered on Friday on a report that the bank was close to a settlement with US authorities to lower the fine to $5.4 billion.
 
In a further boost to Deutsche's morale, top executives from some of Germany's largest firms, such as Siemens, Daimler and BASF, rallied behind the lender on Sunday and said Cryan still had their trust.
 
Cryan already announced some 9,000 job cuts last year – nearly a tenth of the bank's workforce – as part of a massive overhaul to improve the Deutsche's profitability in an environment of low interest rates and sluggish global growth.
 
The German government has strongly denied preparing any rescue plans for Deutsche, while the bank itself has said it does not need any state aid.

BANKING

German online bank N26 shutters US service

German online bank N26 said Thursday it was closing its operation in the United States next year, as regulators in Europe place the "fintech" start-up under increased scrutiny.

The N26 logo on a bank card.
The N26 logo on a bank card. Photo: picture alliance/dpa | Christophe Gateau

N26’s 500,000 customers in the US would be able to use their services until January 11th, 2022, the bank said in a statement, after which it would cease to operate in a market it first entered in 2019.

Instead the Berlin-based operation would “sharpen its focus on its European business”, where it already operates in 24 countries and is exploring expansion into more eastern European markets.

N26 said it would also look to launch new “investment products in the coming year” to sit along side its current account service.

Founded in 2013, N26 offers free, online-only banking services to around seven million clients and is one of Germany’s most high-profile financial technology or “fintech” firms.

In October, the bank raised $900 million from private investors, and announced a plan to hire a further 1,000 employees to reinforce its product development, technology and cybersecurity teams.

READ ALSO: German online bank N26 to create 1,000 jobs

At home, N26 has been in the crosshairs of the German banking watchdog BaFin since 2018 after a local news media investigation found that it was possible to open account with forged IDs.

Earlier in the month, the regulator said it was upping its oversight operations at N26, appointing a special representative to monitor the bank’s progress towards solving issues in “risk management with regard to IT and outsourcing” identified by BaFin.

The regulator also limited the number of new customers N26 could take on to 50,000 a month until the shortcomings were addressed.

N26 was already being monitored by BaFin over failures in the start-up’s anti-money laundering system.

BaFin issued N26 with a 4.25-million-euro ($4.8-million) penalty earlier this year in connection with around 50 “suspicious transactions” the bank failed to report promptly enough.

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