Bloomberg: Deutsche Bank makes $35bn derivatives payments mistake to Eurex Clearing

Deutsche Bank AG made an accidental $35 billion payment to Eurex Clearing when it inadvertently transferred €28 billion to one of its outside accounts, Bloomberg News has revealed. While the blunder was quickly reversed and caused no financial harm, it’s a stark reminder of the vulnerability of even the most sophisticated financial firms.

The routine payment that went awry last month was one that Germany’s biggest lender unintentionally sent to an exchange as part of its daily dealings in derivatives, a person familiar with the matter said. The errant transfer occurred about a week before Easter as Deutsche Bank was conducting a daily collateral adjustment, the person said. The sum, which far exceeded the amount it was due to post, landed in an account at Deutsche Boerse AG’s Eurex clearinghouse, temporarily boosting the collateral held by the world’s fourth-largest clearinghouse by more than half.

The error should have been caught by an internal fail-safe system known as a “bear trap,” a person familiar with the matter said. The mechanism was set up after an internal audit at the bank triggered by an earlier collateral payments error in March 2014, the person said. While such errors do occur, the amount involved, more than the bank’s market value of around €24 billion, is highly unusual, according to the person.

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