By Chris Dorrell
Deutsche Bank and Barclays have both cut bonuses for senior staff that inappropriately used WhatsApp as the fallout from an industry-wide crackdown on the use of private messaging services continues.
According to Bloomberg, employees at Deutsche Bank who were found to be in severe breach of policies will see a “substantial reduction” in their bonus.
Deutsche Bank has paid an $125m (£104m) fine to the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission for its failures on this issue. The bank has since rolled out new software to address the issue.
Similarly, Barclays reported yesterday that it had penalised bankers for “the use of unauthorised business communications channels” such WhatsApp amid a slew of bonus cuts due to regulatory failings.
CEO CS Venkatakrishnan took a £403,000 bonus hit while finance director Anna Cross took a £166,000 cut for various compliance failures, including the use of private messaging services.
Brad Levy, CEO at Symphony, said “Deutsche Bank and Barclays cutting staff bonuses are the latest examples of banks regaining control over the costly use of unauthorised messaging platforms, but this is just the tip of an iceberg of compliance issues on the horizon for financial firms.”
The penalties imposed by the European lenders comes just weeks after the Financial Times reported Morgan Stanley could fine offending employees more than $1m (£810,000) per person.
There has been a Wall Street-wide crackdown on the use of private messaging services in conducting official business, which saw the SEC hand out $1.8bn worth of fines to 16 lenders including Goldman, Citi, and Morgan Stanley.
The UK’s Financial Conduct Authority has also quizzed bank chiefs in the UK on the use of Whatsapp, suggesting the UK regulator could follow the SEC’s example in fining firms for messaging breaches.
But experts suggested that banks imposing penalties on their employees was not necessarily an effective way of tackling the issue.
Oliver Blower, chief executive of communications analytics company Voxsmart, said the fines do “not change the fact that it is still the go-to form of communication between investment banks and their clients.
“Aiming to change an entire generation’s communication behaviour is not a feasible way of tackling this issue – it is instead up to banks to adapt their approach to risk management to cater for the modern ways of doing business,” he continued.
Levy agreed, arguing “UK banks can ill-afford these hits at a time when earnings – and London’s standing as a global financial hub – are under scrutiny.”
The use of private messaging services such as Whatsapp makes it more difficult for regulators to review communications in the event they need to investigate, and the practice is said to have become a particular problem during the pandemic when more financial services staff worked from home.
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