Deutsche Bank AG’s Christian Bittar, one of the firm’s best-paid traders, lost about 40 million euros ($53 million) in bonuses after he was fired for trying to rig interest rates, three people with knowledge of the move said.
The lender dismissed Bittar in December 2011, claiming he colluded with a Barclays Plc trader to manipulate rates and boost the value of his trades in 2006 and 2007, said the people, who requested anonymity because they weren’t authorized to speak publicly. His attempts to rig the euro interbank offered rate and similar efforts by derivatives trader Guillaume Adolph over yen Libor are the focus of the bank’s probe, the people said. Both traders declined to comment for this story.
“Upon discovering that a limited number of employees acted inappropriately, we sanctioned or dismissed those involved and clawed back all of their unvested compensation,” Deutsche Bank spokesman Michael Golden said in a statement. “To date we have found no link between the inappropriate conduct of a limited number of employees and the profits generated by these trades.”
Regulators are investigating claims that traders at more than 16 companies manipulated submissions used to set benchmarks such as Euribor to profit from bets on interest-rate derivatives. Ex-traders say their firms had no rules governing how Euribor and Libor should be set and that managers were aware that traders, who stood to benefit from where the rate was fixed, were on occasions making submissions to the benchmarks.
Anshu Jain
Deutsche Bank’s Golden said the Frankfurt-based lender is cooperating with regulators and that its continuing internal investigation has cleared current and former management board members of wrongdoing. Co-Chief Executive Officer Anshu Jain, who said this week he was sickened by the scandal, has faced calls from German lawmakers to publish the findings of a probe by BaFin, the country’s financial regulator, into the lender’s rate-submission process. That inquiry is still to be completed.
Bittar, who joined Deutsche Bank in 2001, was a proprietary trader specializing in short-term derivatives contracts and entitled to a percentage of the profit from his trades, the people said. He took billion-euro positions on the direction of short-term interest rates with the firm’s own money and reaped hundreds of millions of euros in profit for the bank, the people said. The bonuses Deutsche Bank pays its staff typically vest over a three-year period.
After the lender started to scale back its proprietary- trading operations in 2008, Bittar was named head of money market derivatives trading in 2010 and moved to Singapore. He now works for Bluecrest Capital Management LLP, Europe’s third- biggest hedge fund with $30 billion under management.
Euribor Spread
One of his strategies involved betting that the cost of borrowing in euros for three and six months would rise more quickly than one-month rates, the people said. That paid off after the collapse of Lehman Brothers Holdings Inc. in September 2008, when banks became unwilling to lend to each other for all but the shortest periods, they said.