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Deutsche Bank (DB) Faces Probe From BaFin Over Postbank Unit
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Deutsche Bank AG (DB - Free Report) is witnessing a probe by the Federal Financial Supervisory Authority (BaFin) following its failure to resolve software issues at its retail unit, Postbank.
The software issues resulted in disruptions to the customer business at the retail unit. The German financial watchdog “observed considerable disturbances in the handling of customer business” at Postbank. The regulator is also examining any shortcomings that are relevant from a supervisory perspective.
“Alongside various disruptions to online and mobile banking and the limited availability of telephone customer services, the disturbances include long processing times for bank account attachment and inheritance matters, account closure/settlement and the repayment of savings deposits,” BaFin said.
The probe is a hurdle for DB in its effort to simplify its computer systems. In July, the company announced the completion of the fourth and final phase of the technological integration of Postbank to migrate client data to its systems. Deutsche Bank had begun the acquisition of Postbank in 2008 during the financial crisis but faced various hurdles in completing its integration over the years.
In July, DB intended to initiate decommissioning Postbank’s hardware and software, leading to cost savings. The integration is expected to result in cost savings in 2023 and 2024. Further, DB expected annual savings of €300 million from 2025.
Over the past six months, DB shares have declined 13% on the NYSE against the industry’s 0.4% rise.
Citigroup Inc. (C - Free Report) consented to the Securities and Exchange Commission’s (“SEC”) cease-and-desist order, levying a civil penalty of $2.9 million on the bank. The bank’s broker-dealer unit has been charged for intentionally violating record-keeping requirements with respect to expenses incurred in its underwriting business.
Citigroupneither denied nor admitted the alleged claims of SEC’s findings.
Wells Fargo & Company (WFC - Free Report) agreed to pay a civil penalty of $35 million to settle SEC’s charges. The charges were levied on WFC for overcharging advisory fees of above $26.8 million in more than 10,900 investment advisory accounts.
Some of WFC and its predecessor firms’ financial advisers consented to reduce standard advisory fees for certain clients. These changes were handwritten or typed on the clients’ investment advisory agreements, thus, reflecting the reduced fees. However, employees in the account processing unit failed to enter reduced advisory fee rates in the company’s billing systems.
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Deutsche Bank (DB) Faces Probe From BaFin Over Postbank Unit
Deutsche Bank AG (DB - Free Report) is witnessing a probe by the Federal Financial Supervisory Authority (BaFin) following its failure to resolve software issues at its retail unit, Postbank.
The software issues resulted in disruptions to the customer business at the retail unit. The German financial watchdog “observed considerable disturbances in the handling of customer business” at Postbank. The regulator is also examining any shortcomings that are relevant from a supervisory perspective.
“Alongside various disruptions to online and mobile banking and the limited availability of telephone customer services, the disturbances include long processing times for bank account attachment and inheritance matters, account closure/settlement and the repayment of savings deposits,” BaFin said.
The probe is a hurdle for DB in its effort to simplify its computer systems. In July, the company announced the completion of the fourth and final phase of the technological integration of Postbank to migrate client data to its systems. Deutsche Bank had begun the acquisition of Postbank in 2008 during the financial crisis but faced various hurdles in completing its integration over the years.
In July, DB intended to initiate decommissioning Postbank’s hardware and software, leading to cost savings. The integration is expected to result in cost savings in 2023 and 2024. Further, DB expected annual savings of €300 million from 2025.
Over the past six months, DB shares have declined 13% on the NYSE against the industry’s 0.4% rise.
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Currently, DB carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Litigations Faced by Peers
Citigroup Inc. (C - Free Report) consented to the Securities and Exchange Commission’s (“SEC”) cease-and-desist order, levying a civil penalty of $2.9 million on the bank. The bank’s broker-dealer unit has been charged for intentionally violating record-keeping requirements with respect to expenses incurred in its underwriting business.
Citigroupneither denied nor admitted the alleged claims of SEC’s findings.
Wells Fargo & Company (WFC - Free Report) agreed to pay a civil penalty of $35 million to settle SEC’s charges. The charges were levied on WFC for overcharging advisory fees of above $26.8 million in more than 10,900 investment advisory accounts.
Some of WFC and its predecessor firms’ financial advisers consented to reduce standard advisory fees for certain clients. These changes were handwritten or typed on the clients’ investment advisory agreements, thus, reflecting the reduced fees. However, employees in the account processing unit failed to enter reduced advisory fee rates in the company’s billing systems.