June 11, 2019 / 1:39 PM / 3 months ago

Ex-Deutsche Bank banker helped game global financial system, Euribor trial told

LONDON (Reuters) - A former Deutsche Bank managing director was part of a group that gamed the global financial system in a five-year plot to rig Euribor interest rates, a prosecutor alleged at the first day of his trial in London on Tuesday.

Andreas Hauschild, a German national, was among those who had sought a dishonest and unfair edge over counterparties in a zero sum game, prosecutor James Waddington alleged as he opened the seventh rate-rigging trial brought by the UK Serious Fraud Office (SFO).

The 54-year-old former senior rate submitter and trader, who denies any wrongdoing, sat impassively in the glass-surrounded dock as Waddington outlined the case against him.

“The criminal activity ... was tied up with the real and legitimate activity of persons who were good at...the job they were employed to do,” Waddington told the jury at London’s Southwark Crown Court, which is scheduled to last five weeks.

“You will see how some intelligent, competitive and ambitious people cheated a global financial system to give them an edge on what were otherwise their perfectly honest and lucrative business deals,” he added.

Hauschild is charged with conspiracy to defraud over the alleged manipulation of Euribor (the euro interbank offered rate), a Brussels-based benchmark that helps determine rates on around $180 trillion of global financial contracts and loans.

Hauschild, who appeared in court wearing an open-necked, white shirt and spectacles, is accused of conspiring with others at Deutsche Bank, Barclays, Societe Generale and other banks between January 2005 and December 2009.

The jury heard that four others, including ex-Deutsche Bank trader Christian Bittar and one-time Barclays trader Philippe Moryoussef had already been convicted over the conspiracy, along with Colin Bermingham, a former Barclays rate submitter, and Carlo Palombo, a former Barclays derivatives trader.

Waddington said the convictions proved a conspiracy had taken place and it was up to the jury to decide whether Hauschild was part of it.

Euribor, like its Libor (London interbank offered rate) counterpart, is designed to reflect the cost of borrowing between banks and is set after submitters at a panel of major banks report their estimated costs of borrowing over various periods to an administrator, who calculates an average.

Prosecutors allege bankers rigged rates by nudging them up or down to benefit trading positions, deliberately and dishonestly ignoring rules that they should be set independently of commercial interests.

Waddington alleged that Frankfurt-based Hauschild had at times ignored London-based Bittar’s requests for rates that would flatter his trading positions not because he disapproved of them but because they interfered with his own “similarly dishonest money-making plans”.

He said Hauschild had told SFO investigators he had thought at the time it was acceptable for Euribor rates to accommodate the financial interests of the bank if rates were set with a reasonable range of figures available in the market.

But Waddington added: “It is common ground in this case that a panel (rate submitting) bank is not permitted to submit rates that take into account a trading advantage.”

Reporting by Kirstin Ridley; Editing by Alexander Smith

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