Deutsche Bank Could Be Barred From Managing Pension Assets

After a number of sanctions from regulators around the world, Deutsche Bank may soon lose the ability to manage assets for U.S. pension plans.

The Department of Labor, in light of the bank’s two recent fraud convictions, may revoke the bank’s qualified professional asset manager (GPAM) status.

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In a ruling that has gone mostly unreported outside of official filings, the department tentatively denied Deutsche Bank’s (ticker: DB) bid for an exemption from possible money-management restrictions. Because two units in other parts of the bank were convicted of felonies, the money management units have faced curbs on running U.S. pension money. At stake is Deutsche Bank’s official status as a qualified professional asset manager, or QPAM. The QPAM designation allows an asset manager to assume multiple roles in overseeing government-regulated Erisa pension plans, or those covered by the Employee Retirement Income Security Act of 1974. It’s unusual for Labor to deny an application for an exemption, even temporarily.

While most observers believe that it’s very unlikely the department would pull Deutsche’s QPAM status, it is expected to set tougher conditions on the bank. This could further complicate the bank’s efforts to reorganize its U.S. banking operation or, if it were so inclined, to sell its U.S. asset-management units. It’s also another headache for shareholders who have seen their stock lose 86% of its value since 2007, with little immediate chance of a turnaround.

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Pedro Plassen Lopes via Flickr CC License