U.S. Federal Reserve officials in late March warned Deutsche Bank AG's senior executives that the German lender must move with more urgency to act on lapses outlined in its several settlements with the regulator over the last few years, Bloomberg News reported May 17, citing people with direct knowledge of the situation.
The officials also said Deutsche Bank's managers needed to do more to change the company's culture and that the lender's units were still using dysfunctional technology, problems which the bank has admitted and is trying to fix, one of the people told the news agency.
The Federal Reserve could impose additional fines or restrict Deutsche Bank's U.S. operations until it fixes the issues, which would cut into the lender's profits, but there is no sign that such a scenario would be likely, Bloomberg said.
Although neither Deutsche Bank nor regulators give updates on the lender's progress, a monitor approved by the Federal Reserve has recently come up with a report outlining various fixes the bank is required to carry out to boost its efforts against money laundering, the people said.
New Deutsche Bank CEO Christian Sewing announced plans that could help the lender comply with regulators, including laying off around 1,000 of its U.S.-based workers. The bank, however, continues to boost its team responsible for spotting suspicious deals, the news agency said.
Meanwhile, Deutsche Bank said it would shorten the paid period in which its laid-off employees cannot move to a competing firm, or so-called gardening leave, to cut costs, unnamed sources told the New York Post. The bank will cut gardening leave for some senior bankers to 30 days from 60 or 90 days, the sources said.