Deutsche Bank has dished out over €10m to Europe’s largest wine exporter to settle a dispute over the alleged mis-selling of foreign exchange derivatives, according to reports.
As the lender’s internal investigation nears its close, the decision to settle could pile pressure on Goldman Sachs and BNP Paribas, which face similar accusations from Japanese engineering firm JGC.
The investigation has already led to the departure of two senior executives: head of Deutsche’s asset wind-down unit Louise Kitchen and co-head of global foreign exchange Jonathan Tinker.
The probe, known as Project Teal, was launched after clients claimed they had been sold technical derivatives products they did not understand, which were potentially in breach of EU rules designed to protect businesses from risky lending.
The forex swaps were pitched by Deutsche’s salespeople as a cheaper option to hedge currency exposure than traditional exchange-rate insurance, which reportedly pushed some clients to suffer financially.
The German bank said in January, when news of its probe broke, that the potential misconduct impacted “a limited number of clients”.
Europe’s largest wine exporter, J Garcia Carrion, is also considering legal action against French lender BNP Paribas after it refused to provide compensation for the losses – which BNP has said complied with all regulatory obligations.
Japan’s JGC is currently in a legal battle with Goldman Sachs in London’s High Court.
JGC is looking for a partial refund of $6.2m, however, Goldman has maintained the products were not overly complex for a multinational company with hedging needs and that the risks were made clear.
City A.M. has contacted Deutsche Bank for comment.