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Christian Sewing. Picture: REUTERS/RALPH ORLOWSKI
Christian Sewing. Picture: REUTERS/RALPH ORLOWSKI

Deutsche Bank’s management board agreed to take a financial hit after criticism from regulators of widespread use of private communication channels among staff via applications such as WhatsApp.

The lender is among several financial firms under investigation by US authorities over the use of private messaging that can’t be archived. It recently introduced a new app that allows the retrieval of messages on company phones, Bloomberg has reported. CEO Christian Sewing and board members agreed to forgo a part of 2023’s bonuses, or €75,000 apiece, reports said.

A spokesman for Deutsche Bank declined to comment. 

The regulatory scrutiny had added to compliance headaches that have built up for Sewing, who has spent billions of dollars trying to fix the bank’s controls and improve relations with supervisors since assuming his role four years ago. While the CEO has drawn a line under several big litigation risks, new issues have continued to arise.

Sewing himself has used WhatsApp in the past to communicate on issues related to the lender. At one point, he swapped messages with German businessman Daniel Wruck, whose role in business deals involving Deutsche Bank and its investment arm DWS has been probed by German investigators, Bloomberg has reported.

The German lender has also begun rolling out a new technical solution that improves oversight of communications through private channels by recording and archiving conversations, one person previously said. The pilot programme kicked off in late April and the software has been installed on the devices of 1,750 client-facing staff in the US, the person said at the time. 

Firms including Goldman Sachs and HSBC have been probed by US regulators over staffers’ communications.

In December, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) imposed $200m in fines on JPMorgan Chase, saying that even MDs and other senior supervisors at the bank had skirted regulatory scrutiny by using services such as WhatsApp or personal email addresses for work-related communication.

In February, Citigroup said in a filing that it was co-operating with the SEC as the regulator investigated “communications sent over unapproved electronic messaging channels”.

JPMorgan asset and wealth management head Mary Erdoes had her 2021 incentive compensation cut “related to internal, SEC and CFTC investigations into the firm’s compliance with certain record preservation requirements”, the firm disclosed in a filing earlier this year. Her total compensation for last year fell to $20.5m from $21m for 2020.

Bloomberg News. More stories like this are available on bloomberg.com


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