One of the highest-paid traders in Deutsche Bank AG, Christian Bittar, was accused and found guilty of manipulating Euribor submissions. His trial is scheduled for this summer. Meanwhile, he is hosted in a Brittish prison.
Euribor rates (short for Euro Interbank Offered Rate) are based on the average interest rates at which a large panel of European banks borrow funds from one another. There are different maturities, ranging from one week to one year and Euribor rates are considered to be the most important reference rates in the European financial market.
The interest rates provide the basis for the price and interest rates of all kinds of financial products like interest rate swaps, interest rate futures, saving accounts and mortgages. That’s the exact reason why many professionals, as well as individuals, do monitor the development of the Euribor rates intensively.
Christian Bittar who grew up in Senegal with a passion for mathematics attended one of the top French Grandes Ecoles universities, and while his career had a bursting beginning it has now come to a brutal ending for the once Deutsche Bank’s “Star Trader”.
After the global financial crisis, in an attempt to understand what happened during that period, banks were the first target of the prosecutors, which fined the former for about $9 million dollars charged with manipulating Euribor. Afterward, they turned to individual traders such as Christian Bittar and Tom Hayes.
Bittar pleaded guilty on March 2nd, 2018 to conspiring in the manipulation of Euribor, while Deutsche Bank itself denies all accusations.
In 2008, during his time with Deutsche Bank, Bittar started a new strategy that involved prognosis of the borrowing prices of euro between banks. More specifically he invested in three and six months rates which he predicted would have a quicker rise than one-month rates at that time. His strategy proved to be working, due to the collapse of Lehman Brothers Holdings Inc. in September 2008. That resulted in trades between banks being considered extremely volatile.
Banks refused to lend to each other for long-term periods, in fear of another collapse, permitting only short-term lending. The fruit of his labor before the new regulations allowed Christian Bittar to receive an astonishing amount of 90 million British pounds in bonuses that year alone.
In 2011, Deutsche Bank dismissed Bittar for allegedly colluding with a Barclays trader to fix benchmark interest rates in his favor in order to boost the value of his trades. Bittar was fined with 10 million British pounds by the FCA and lost around $50 million dollars in unvested stock.
Deutsche Bank was also forced to pay its own fines in 2015, one of which was set to $2,5 billion dollars, due to Deutsche Bank’s failure to prevent the attempts to rig the benchmark rates.
Christian Bittar is currently held in a British prison until his judgment day planned this summer.