Deutsche Bank raided by German police in money-laundering probe

BERLIN • German authorities descended on Deutsche Bank AG, including its downtown Frankfurt headquarters, in a coordinated raid related to a money-laundering investigation.

More than six police vehicles, their blue lights flashing, pulled up to Deutsche Bank’s main office shortly before 9am yesterday, in an operation involving about 170 officers. They targeted as suspects two bank employees who were not identified beyond their ages — 50 and 46. The bank said it was cooperating.

For the beleaguered German lender, the raid adds to a panoply of headaches — commercial, regulatory and legal — facing CEO Christian Sewing and chairman Paul Achleitner. Its shares have lost almost half their value this year, after sliding 3.4% yesterday. The cost of insuring its junior debt against losses jumped 11 basis points (bps) to 383bps, the highest in two years, according to data compiled by CMA.

“This must be associated with criminal behaviour and not just a trivial offence,” said Stefan Mueller CEO of DGWA, an investment advisory boutique based in Frankfurt. He believes the bank will now be paralysed for months until it becomes clear how it will be effected by new potential fines.

“Maybe this time, Achleitner will fall. The bank needs fresh blood to make a radical cut at its management.”

The investigation stems from revelations in the Panama Papers, a collection of documents leaked in 2016 from Mossack Fonseca, a Panama-based law firm that created shell companies. At the time, Deutsche Bank severed ties with a Cyp riot lender partly owned by VTB Group that was identified in the reporting.

The subsequent investigations from the Panama Papers exposed evidence Deutsche Bank helped clients set up offshore accounts, prosecutors said. The officials said yesterday’s raid wasn’t related to its role as a correspondent bank for money laundering at Denmark’s Danske Bank.

The German lender may have helped clients in setting up offshore companies in tax havens. Money obtained illegally may have been transferred to accounts at Deutsche Bank, which failed to report the suspicions that the accounts may have been used to launder money, Frankfurt prosecutors said.

In an emailed statement, Deutsche Bank confirmed that police are investigating at several German locations in relation to Panama Papers, and said it is fully cooperating with authorities. — Bloomberg