German police raids Deutsche Bank in Panama Papers probe

German authorities descended on Deutsche Bank AG, including its downtown Frankfurt headquarters, in a coordinated raid related to a Panama Papers investigation.

Nov 29, 2018 02:11 IST India Infoline News Service

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 offices shortly before 9 am, in an operation involving about 170 officers.

The main suspects in the probe stemming from 2016 disclosures known as the Panama Papers were two bank employees who were not identified beyond their ages -- 50 and 46. Authorities seized documents and electronic files and said they were also looking at whether others might have been involved.

“As far as we are concerned, we have already provided the authorities with all the relevant information regarding the Panama Papers,” Deutsche Bank spokesman Joerg Eigendorf told reporters in Frankfurt.

For the beleaguered German lender, the raid adds to a panoply of headaches -- commercial, regulatory and legal -- facing Chief Executive Office Christian Sewing and Chairman Paul Achleitner. The stock has lost almost half its value this year, after sliding about 3% on Thursday. The cost of insuring its junior debt against losses jumped 11 basis points to 383 basis points, the highest in two years, according to data compiled by CMA.

“This must be associated with criminal behavior and not just a trivial offense,” said Stefan Mueller chief executive officer of DGWA, an investment advisory boutique based in Frankfurt. He believes the bank will now be paralyzed for months until it becomes clear how it will be affected by new potential fines. “Maybe this time, Achleitner will fall. The bank needs fresh blood to make a radical cut at its management.”

The Panama Papers refer to a collection of documents leaked in 2016 from Mossack Fonseca, a Panama-based law firm that created shell companies to facilitate tax avoidance. At the time, Deutsche Bank severed ties with a Cypriot lender partly owned by VTB Group that was identified in the reporting.

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

Source: Bloomberg

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