Deutsche-Ille ruling changes sales practices for German dealers

Six months after a German federal court ruled against Deutsche Bank in a derivatives mis-selling case, dealers in the country are still wrestling with the implications, but some have already tweaked their sales practices. By Alex Monro

In March, the Federal Court of Justice in Karlsruhe, Germany, ordered Deutsche Bank to pay €541,000 in damages over the 2005 restructuring of two interest rate swaps. The size of the award has proved to be incidental, however. Far more significant was the detail of the ruling, which turned on Deutsche’s failure to disclose that the restructured swap – a relatively complex trade in which the client’s floating payments were tied to the spread between two-year and 10-year Euribor – had a negative