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Ex-Deutsche Bank Trader Fixed Key Rates for Bittar, SFO Says

Ex-Deutsche Bank Trader Fixed Euribor Rates for Bittar, SFO Says

(Bloomberg) --

British prosecutors said a former senior banker at Deutsche Bank AG in Frankfurt helped convicted trader Christian Bittar rig a key interest rate. That is, unless it got in the way of his own "dishonest" money-making plans.

Andreas Hauschild is charged with conspiring with Bittar and traders at Barclays Plc to fix the benchmark Euribor rate. But the banker, who oversaw Deutsche Bank’s rate setting, also used the submissions to help his desk and his own trading positions, a lawyer for the Serious Fraud Office said. Hauschild denies the allegations and said he wasn’t being dishonest.

"There was this tension between what Mr. Bittar wanted in London and what Mr. Hauschild and his team wanted in Frankfurt," James Waddington, a lawyer for the SFO, said in his opening speech to the jury on Tuesday.

Bittar at Deutsche Bank, his friend Philippe Moryoussef at Barclays, and two other traders at the British bank were convicted of manipulating the Euro interbank offered rate, which is related to trillions of dollars worth of loans and derivatives. The SFO investigation was part of a wider probe into benchmark rates, the most famous of which was Libor.

Unfair Edge

The traders “practiced fraud to give them an unfair edge," Waddington said. “It wasn’t a level playing field.”

The SFO’s lawyer said that while Hauschild accepted requests from Bittar, "the big fish in London," to influence Deutsche Bank’s rate setting, he thwarted the trader if it "interfered with his own dishonest money-making plans.”

"Frankfurt was quite happy to let Mr. Bittar get his own way on rates unless Mr. Hauschild had some deals that were different to Bittar’s," Waddington said. The German banker’s wishes often prevailed, he said, "given that he ruled the roost in Frankfurt."

Hauschild, at the time a managing director and 15-year veteran at Deutsche Bank, was paid a total of 1.85 million euros ($2.1 million) including his bonus in 2005. In Frankfurt, he oversaw traders including Ardalan Gharagozlou, Joerg Vogt and Kai-Uwe Kappauf, who are named as co-conspirators, Waddington said.

The Euribor rate is calculated with submissions from major banks and is meant to reflect the cost of borrowing between them.

Hauschild has maintained that there was nothing wrong with taking a trader’s positions into account as long as the bank submitted a legitimate rate from within a range, Waddington said. But it compromised the integrity of the benchmark, the lawyer said.

“No doubt Mr. Hauschild and others squared the behavior with their own conscience," he said.

To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser

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