Deutsche Bank, Citigroup Inc. and ING fined for currency speculation in Taiwan

A ban on trading forward contracts and a two-year ban on trading derivatives on Forex market - these are penalties imposed by the Central Bank of Taiwan on Deutsche Bank. The branch of Deutsche Bank in Taiwan has manipulated currency. Like Citigroup, Australia and New Zealand Banking Group Ltd and ING, but penalties for them will be lower.

Forward contracts Deutsche Bank will not be able to trade on the Taiwan dollar until further notice. Forex derivatives will be unavailable in Taiwan to bank traders for two years.

The geopolitical situation and increased volatility due to the pandemic have created many investment opportunities in Taiwan. Some wanted to help them too much, or rather help themselves. 

The Taiwan dollar becomes more expensive

Today, the value of the Taiwan dollar relative to its US dollar is at its highest in 23 years. Taiwan sells more and more products all over the world, and the economy is booming, because it is based mainly on the production of technological novelties, which prove themselves especially in times of a pandemic and remote work.

It turned out, however, that some of the movements in the currency could be caused by dirty moves. According to the Central Bank of Thailand, foreign banks helped, among others grain companies to speculate through forward contracts. The transactions were so large that they even shook the stability of the Taiwanese currency market.

Not only Deutsche Bank. Citigroup Inc, ANZ, and ING were also fined

The Reuters agency notes that the information on the fines imposed by the Central Bank of Taiwan also reached Citigroup Inc, ING and Australia and New Zealand Banking Group Ltd (ANZ). According to Taiwan's financial authorities, Deutsche Bank is the most at fault, so penalties for other companies will be lower. Local branches of ING and Australia and New Zealand Banking Group Ltd are prohibited from trading forward contracts on Taiwan dollar for 9 months. Citibank is limited to only two months.

Banks accept penalties and do not comment

Representatives of punished banks do not comment on this decision, but we also know that they have agreed to accept penalties. Therefore, it is difficult to find a more eloquent - though still unofficial - admission of guilt, leaving at the same time enough understatement to say in the future - when the matter is already quiet and the memory of details is gone - that it was, for example, a mistake, and the punishment was agreed in as part of good cooperation ...

Only Deutsche Bank responded to the decision Central Bank of Taiwan, but the bank's spokesman talked about everything but the details and the actual activities of his company. We only learned from the statement that Deutsche Bank cooperates with the Central Bank  Taiwan and its customers in the field of handling open transactions on the Taiwanese dollar. However, we have learned nothing about the details of the possible dispute, the seriousness of the offenses, etc. We only know that the penalty has come into force and the bank will humbly submit to it.

The settlement of already open transactions was a big problem. And the authorities of the Central Bank of Taiwan were aware of this. 

“The transactions carried out by the sanctioned banks by Friday were settled according to the schedule. Of course, no further ones may be included until the penalty ceases to apply. Deutsche Bank was punished most severely, but the penalties were commensurate with the offenses of specific banks. Therefore, the Deutsche Bank branch will not be able to trade Forex options or even swaps " - Eugene Tsai, head of the currency market of the Taiwan central bank, emphasized in an interview with Reuters.