Deutsche Bank (DB - Free Report) in trouble again as the German regulator — BaFin — has demanded the bank to monitor details of about 20,000 risky customers from the corporate and investment banking unit within June-end. The news was first reported by Handelsblatt.
As part of this process, all important customer-related information and documents are required to be readily available by June. Also, the risky clients must be re-evaluated based on the new money laundering directive.
The newspaper also reported that review of medium-risk clients can be completed by June 2020, while lower risk customers’ re-evaluation can be done by 2021.
Deutsche Bank has been charged for weaknesses in its money laundering monitoring process by BaFin in the past as well. In September 2018, it was instructed to improve such processes.
The bank was asked to undertake appropriate internal control measures and “comply with general due diligence obligations”. At the time, Deutsche Bank had said that it agrees with BaFin over need to improve processes to properly control wrongdoings. Also, the regulator appointed KPMG with to report and assess the progress of the ordered measures.
On failing to meet its requirements, BaFin can impose financial penalties on the bank, or even dismiss some board members.
Last year did not prove to be a good one for Deutsche Bank, as global headwinds and its involvement in a number of legal probes dragged the stock price to all-time lows.
In December 2018, antitrust regulators at the European Union accused Deutsche Bank and Credit Agricole and Credit Suisse (CS - Free Report) of rigging prices of U.S. dollar-denominated government bonds for a period of about seven years (2009-2015).
Further, suspicions of the German lender’s involvement in processing nearly $150 billion in potential payments at Danske Bank, which is at the heart of Europe’s one of the biggest money laundering scandals, affected its performance.
In six months’ time, the stock has lost 23.3% on the NYSE compared with 4.2% decline recorded by the industry.
Deutsche Bank currently carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks in the same space are HDFC Bank Limited (HDB - Free Report) and HSBC Holdings plc (HSBC - Free Report) . Both these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for HDFC Bank has remained stable for the current year, in the past 30 days. The company’s share price has gained 60.9% in the past two years.
HSBC’s earnings estimates for 2018 have been revised 5.3% upward, in the past 30 days. Its share price has risen slightly in the past two years.
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