Ex-Deutsche Bank Trader Made `Ridiculous' Request for High Rate

(Bloomberg) -- A colleague’s request for a higher Euribor submission was so skewed that it was “ridiculous,” a former Deutsche Bank AG trader said in an email read out during a London trial into rate-rigging.

But later that day, prosecutors say, the higher rate was entered anyway.

Joerg Vogt in Frankfurt was close to the team submitting information behind Euribor, the benchmark that influences trillions of dollars in derivatives, when Christian Bittar made the request to influence rates. The proposal was to make an entry two basis points above their preferred figure, according to a message read to jurors Thursday by prosecutor James Waddington.

The evidence was presented during the second day of cross-examination of Achim Kraemer, a manager at the German lender. The 53-year-old is one of five Deutsche Bank and Barclays Plc bankers on trial for illegally manipulating Euribor -- the euro interbank offered rate -- between 2005 and 2009.

Bittar pleaded guilty before the start of the trial, while former Barclays trader Philippe Moryoussef has chosen not to be represented in court. Apart from Bittar, they all deny the single charge against them.

‘Strange Word’

"It’s patently obvious that it’s manipulative of the Euribor system if the rate is ridiculous," Waddington said.

"It’s a strange word to use," Kraemer said.

Waddington said that Bittar sent messages to Vogt, Ardalan Gharagozlou and Kai-Uwe Kappauf -- all of whom Kraemer supervised -- in the Frankfurt trading pool so that they could then ask the lender’s Euribor submitters sitting behind them to adjust their entries to better suit his trades.

Kraemer, who still works in Deutsche Bank’s liquidity department and has never faced an internal disciplinary investigation, voluntarily came to stand trial. Four other Deutsche Bank traders were initially charged by U.K. prosecutors, but attempts to extradite them were rejected by German courts.

Kraemer said that on viewing the evidence on the traders -- who he said he supervised, but insisted he wasn’t their line manager -- he could see that they were influencing Deutsche Bank’s Euribor submissions, though it wasn’t their role. He said he was unaware of their communications with Bittar and never took part in a plan to rig rates.

“I do have to suggest to you that what you have just said is absurd," Waddington said. “Of course you knew what was going on in the pool, because you all discussed what was going on in the pool.”

Waddington also said that Kraemer didn’t get many messages about the rate submissions because he was usually in the office and verbally discussed the issue. On one occasion, however, trader Andreas Hauschild appeared to be out of the office and emailed Kraemer, saying he needed a low fixing for the three-month rate. Waddington said that if Kraemer had not been in on the conspiracy to rig Euribor, Hauschild wouldn’t have written to him.

"I just saw it as a statement, I didn’t really see it as a request," Kraemer said. Still, on that day, Deutsche Bank’s submission was the lowest of all 47 banks making Euribor submissions, Waddington said.

©2018 Bloomberg L.P.