Madrid: Deutsche Bank AG, Germany’s biggest bank, was fined €1 million ($1.3 million) and suspended from underwriting some equity offerings in Spain for leaking information about a share sale in 2004.
The Comision Nacional del Mercado de Valores, Spain’s market regulator, penalized Frankfurt-based Deutsche Bank for its handling of a stock offering by Ebro Puleva SA, the world’s largest rice producer, according to a notice in the official government gazette published March 2.
“It isn’t good for their image,” said Sebastian Reuter, an analyst at Helaba Trust in Frankfurt. “But Deutsche Bank isn’t alone in making mistakes and this will have no impact on their earnings.” Reuter has a buy recommendation on the stock.
Deutsche Bank’s conduct in managing securities sales also attracted regulators in France and the U.K. The Paris-based Autorite des Marches Financiers in January fined the bank 300,000 euros for not abiding by rules when sounding out investors before a securities offering. In the U.K., Deutsche Bank was fined 6.3 million pounds ($12 million) last year for “market misconduct” on two stock sales that took place in 2004.
Elaine Bartleet, a spokeswoman for Deutsche Bank in London, said the bank doesn’t plan to appeal the sanction. The three- month suspension, which applies to so-called accelerated offerings, ends on March 20, Bartleet said.
Deutsche Bank shares fell as much as 2.6 percent and were down 1.6 percent to 96.19 euros as of 10:14 a.m. in Frankfurt.
This year there have been two accelerated offerings in Spain that raised a total of 471 million euros, data compiled by Bloomberg show. Banks typically charge fees of about 1 percent of total proceeds on such sales.
The case involving Ebro Puleva focuses on a 196 million-euro block trade arranged by Deutsche Bank. The trade drew the attention of regulators because shares of Madrid-based Ebro Puleva fell 3 percent on Feb. 26, 2004, the biggest drop in more than a year, before the sale was announced.
Investment banks typically sound out investors before they sell securities to gauge demand. When they pass on such information, they are required to keep a record of their conversations and to make it clear that the recipient can’t trade on that information.