Cartel Charges Leveled Against Deutsche Bank and Others Over Australian Bank Deal

The Australian Competition and Consumer Commission will prosecute ANZ, Deutsche Bank, and Citigroup on criminal cartel charges stemming from a 2015 deal.

Published Jun 1, 2018

 (Vytautas Kielaitis /
Image Via Vytautas Kielaitis /

On 1 June 2018, the Australia and New Zealand Banking Group (ANZ) — one of the "big four" Australian banks — was charged with operating as an illegal cartel by the Australian Competition and Consumer Commission. "Cartel" has a strict definition under Australian law:

A cartel exists when businesses agree to act together instead of competing with each other. This agreement is designed to drive up the profits of cartel members while maintaining the illusion of competition. [...] The Competition and Consumer Act not only prohibits cartels under civil law, but makes it a criminal offence for businesses and individuals to participate in a cartel.

The charges relate to a 2015 effort by ANZ to raise funds. At the time, the bank sought to raise capital extremely rapidly, as a government report led many banks to believe (some would argue incorrectly) that new regulations would be imposed on banks that failed to meet certain monetary requirements:

When [former Commonwealth Bank of Australia chief David] Murray delivered his final report on December 7, 2014, the essence of his message was that while we were reliant on foreign funding, our banks had to be 'unquestionably strong". He doubted this was the case. Murray's inquiry also called for an end to the free kick given to the biggest banks that allowed them to hold less capital per dollar of mortgages on account of their advanced risk models.

Hoping to get out ahead of the issue, ANZ raised a significant amount of money through the sale of 80.8 million shares of their company. That deal — which the Australian government alleges was improperly coordinated — was underwritten by Germany’s Deutsche Bank, and the United States’ Citigroup and JP Morgan. In addition to ANZ, Deutsche Bank and Citigroup also face cartel charges from the Australian government related to this deal, the BBC reported:

ANZ, one of Australia's so-called "big four" banks, said the charges related to a placement of 80.8 million shares. The deal was underwritten by global giants Deutsche Bank, Citigroup and JP Morgan, as part of a bid by ANZ to raise capital to meet regulatory requirements. ANZ said regulators were now investigating whether it should have stated that 25.5 million shares of the placement had been taken up by "joint lead managers".

This development is especially problematic for Deutsche Bank, whose credit rating was recently downgraded amid fears that the bank’s recent restructuring is more risky than anticipated, and because of actions taken by the US Federal Deposit Insurance Corporation (FDIC), as reported by German news outlet DW:

While the main charges here relate to ANZ, the presence of Deutsche Bank's name in the case adds further misery for the Frankfurt-based German lender at the end of a disastrous week.

On Thursday, rating agency S&P downgraded its view of Deutsche Bank's financial stability, down from A- to BBB+. The agency attributed its decision on Germany's largest lender to the fact that it believes the bank's latest restructuring is riskier than had been expected.

That news came at the same time as Deutsche Bank's US subsidiary was added to the US Federal Deposit Insurance Corporation's list of "problem banks."

News that Deutsche Bank was downgraded to “troubled condition” and added to list of “problem banks” broke the same week as the cartel charges were announced, but — according to the Wall Street Journal — their downgrade occurred “about a year ago,” though they have been the target of U.S. regulatory scorn for even longer.

The news of the downgraded status follows a March 2018 report that New York’s Department of Financial Services had requested information about any financial arrangements Deutsche Bank had with the Kushner family as part of its own assessment on the safety of that bank:

The Department of Financial Services, the New York regulator, sent a letter last week to Deutsche Bank, Signature Bank and New York Community Bank seeking information about financial arrangements, such as loans and lines of credit, with the Kushner Companies and the family members, the source said.

The regulator, which oversees the safety of New York banks, has asked whether there are any personal guarantees by Jared Kushner on the financing arrangements, to understand the banks' risk if there is a default and the Kushners are unable to pay. The letter is also seeking information about whether any collateral was provided to secure the loans, this source added. [...]

With questions about the financing of Kushner Companies' investments and Robert Mueller's special counsel investigation looming, the regulator is focusing on the safety of the small banks, which could be affected if the Kushners or their business has trouble paying their debts, the person familiar with the matter said.

Deutsche Bank has also reportedly been of interest to the Special Counsel's investigation, thanks to Trump’s especially long relationship with the bank, as reported by Mother Jones:

Mueller’s office reportedly subpoenaed Deutsche Bank for information on former Trump campaign chairman Paul Manafort, and according to the New York Times, the US attorney for the Eastern District of New York has sought documents relating to the family of Trump’s son-in-law, Jared Kushner. The news that Mueller was seeking records from Deutsche Bank reportedly enraged Trump so much that he considered firing Mueller, but aides talked him down.

While it is unclear how significant these factors have been to decisions that led Deutsche Bank to be downgraded, or to any aspect related to the Australian investigation of its involvement in the ANZ deal, the addition of those cartel charges is another major problem for the embattled bank. Representatives for ANZ, Deutsche Bank, and Citigroup have each stated they will contest the charges.


Australian Competition and Consumer Commission.   "Cartels."     Accessed 1 June 2018.

Moullakis, Joyce, and Shapiro, Jonathan.   “ANZ and CBA Raised $8 Billion in a Week. This Is the Inside Story.”     Financial Review.   14 August 2015.

Eyers, James.   “ANZ Chief Mike Smith Lambasts Bank Capital 'Frenzy'.”     Financial Review.   5 May 2015.

BBC News.   "ANZ, Deutsche Bank and Citigroup Face 'Criminal Cartel' Charges."     1 June 2018.

DW.   "ANZ Faces Criminal Charges, Deutsche Bank in Firing Line."     1 June 2018.

Strasburg, Jenny, and Tracy, Ryan.   “Deutsche Bank’s U.S. Operations Deemed Troubled by Fed.”     Wall Street Journal.   1 June 2018.

Smith, Allan.   “Trump's Long and Winding History With Deutsche Bank Could Now Be at the Center of Robert Mueller's Investigation.”     Business Insider.   8 December 2017.

Choma, Russ.   “The Head of the Deutsche Bank Division That Loaned Trump $364 Million Just Got a Big Promotion.”     Mother Jones.   20 April 2018.

Alex Kasprak is an investigative journalist and science writer reporting on scientific misinformation, online fraud, and financial crime.

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