Last month, Deutsche Bank AG mistakenly sent €28 billion ($35 billion) to an exchange.
According to news from Bloomberg, a person familiar with the matter revealed the blunder made by Germany’s biggest lender.
The erroneous bank transfer happened about a week before Easter as the financial institution was carrying out a daily collateral adjustment. The funds wound up in an account at Deutsche Boerse AG’s Eurex clearinghouse.
“This was an operational error in the movement of collateral between Deutsche Bank’s principal accounts and Deutsche Bank’s Eurex account,” Charlie Olivier, a spokesman for Deutsche Bank, wrote in an emailed statement. “The error was identified within a matter of minutes, and then rectified. We have rigorously reviewed the reasons why this error occurred and [have] taken steps to prevent its recurrence.”
But the source pointed out that the error should have been caught by an internal fail-safe system known as a “bear-trap.” The system was set up in March 2014 as the result of an internal audit at the bank, which was ordered after an earlier collateral payments error.
In addition, the amount involved, which is more than the bank’s market capitalization of around €24 billion, poses a red flag, according to the source.
Eurex held back €4 billion of the funds over the weekend of March 23. A spokesman for Deutsche Boerse said the company doesn’t comment on single transactions or client relationships.
The mistake comes at a time when the bank is dealing with its third straight annual loss. In fact, it’s the worst-performing member of the Stoxx 600 Banks Index this year, with shares falling 26 percent to date.
Christian Sewing is also stepping in for outgoing Chief Executive Officer John Cryan, while Deutsche Bank’s Chief Operating Officer Kim Hammonds is being ousted.
Hammonds reportedly called Deutsche Bank “the most dysfunctional company” she’d ever worked for.
Last month, Deutsche announced it was trimming its corporate services through a sale of its corporate banking business in Portugal in an effort to control costs and streamline its business.