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Taiwan penalized Deutsche Bank AG and three other foreign lenders after an investigation into speculation about the rise in the local currency last year involving grain companies.
Deutsche Bank’s trading approvals for deliverable and undeliverable Taiwanese dollar futures contracts will be revoked and it will be barred from engaging in foreign exchange derivative transactions for two years, the central bank of the Bank said on Sunday. island in a statement.
ING Groep NV and Australia and New Zealand Banking Group Ltd. will not be allowed to engage in Taiwan dollar-denominated futures and undeliverable futures for nine months, while Citigroup Inc. is prohibited from trading in Taiwanese dollar deliverable futures for two months, the central bank said. The penalties imposed on local units will take effect on Monday.
Banks were informed of the sanctions on Friday. Transactions made before the notice will not be affected, the central bank said.
Citigroup declined to comment. Deutsche Bank, ING and ANZ did not immediately respond to calls for out-of-hours comment.
Eight of Asia’s leading food traders, with the help of six foreign banks, built a total of $ 11 billion from their Taiwan dollar deliverable futures positions at the end of July, the central bank said last month. The positions were based on foreign physical grain exchanges deliberately negotiated through their Taiwanese units to speculate in the local currency, affecting market stability, he said.
Cargill Inc. and Louis Dreyfus Co. were involved, along with Deutsche Bank, Citigroup, JPMorgan Chase & Co. and Standard Chartered Plc, among others, Bloomberg News reported in January, citing people with knowledge of the subject. At least some of the trades were specifically designed to take advantage of the rising Taiwan dollar, people familiar with it.
The island’s dollar has strengthened nearly 7% against the US dollar over the past 12 months, among the top performers in the region, according to Bloomberg data.
The central bank settled with two lenders in November, she said Sunday, without identifying them. All six banks violated the rules because futures transactions had to be made according to their actual needs, the central bank said on Sunday.
According to Eugene Tsai, managing director of the central bank’s foreign exchange department, Deutsche Bank may in the future reapply for revoked trading approval.
Taiwan’s central bank tightly regulates how much of its dollars foreign companies can accumulate to avoid currency speculation. He had said the huge positions commodity companies had built in futures deliverables went beyond their actual business needs.
– With the help of Argin Chang
(Updates with fifth paragraph probe.)
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