Deutsche Bank (DBK) is still falling foul of its past misconduct. The Comisión Nacional del Mercado de Valores (CNMV), Spain’s National Securities Market Commission, has imposed a €10 million fine on the bank for “very serious infringements” related to the mis-selling of complex foreign exchange (FX) derivatives to Spanish clients between 2018 and 2021.
The CNMV’s investigation revealed that Deutsche Bank failed to adequately inform several Spanish corporate clients about the risks associated with intricate FX derivative products, specifically Target Profit Forwards (TPFs) and Pivot TPFs. TPF typically carry a short option leg that is often unsuitable to unsophisticated investors. CNMV stated that the bank neglected to conduct proper assessments of the suitability and appropriateness of these products for their clients, leading to significant financial losses for some.
In addition to the monetary penalty, the CNMV has prohibited Deutsche Bank from providing investment advisory services related to complex FX derivatives for one year. This is not the first instance of Deutsche Bank facing repercussions for such practices. In July 2024, the bank settled a €500 million claim with Palladium Hotel Group, a Spanish hotel chain, over losses incurred from FX derivatives. Palladium alleged that Deutsche Bank sold them products they did not fully understand, resulting in substantial financial harm.
A 2019 Deustche Bank internal probe codenamed “Project Teal” revealed that staff exploited control weaknesses and violated EU regulations by promoting high-risk products to small and medium-sized Spanish enterprises, leading to significant client losses. Despite these findings, reports indicate that the bank continued to sell such products to affected companies in Spain even after the investigation concluded.
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