Deutsche Bank offices searched in client transactions probe
June 09 2015 09:28 PM

The headquarters of Deutsche Bank in Frankfurt. The lender has been battered by a series of scandals and compliance costs that have topped $10bn over the past years.


Deutsche Bank said its offices in Frankfurt were searched yesterday as part of an investigation into securities transactions by clients. The shares slumped.
Prosecutors in Frankfurt are conducting the raids, Christian Streckert, a spokesman for Deutsche Bank, said by telephone yesterday. Bank employees are not accused of wrongdoing, he said. A spokesman for the prosecutors’ office declined to immediately comment.
Deutsche Bank has been battered by a series of scandals and compliance costs that have topped $10bn over the past years. Co-Chief Executive Officers Anshu Jain and Juergen Fitschen on Sunday said they would step down early, with John Cryan taking sole charge of Germany’s largest bank next May.
Deutsche Bank fell as much as 3.3% in Frankfurt and was down 3.2% at €27.69 at 2:19 pm, paring gains this year to about 11%.
Criminal investigators and tax authorities searched bank properties in Frankfurt, London and Paris as well as other parts of Germany, Germany’s Bild Zeitung reported, without saying how it obtained the information. The searches are part of a probe into a tax lawyer from Hesse and others suspected of being involved in tax evasion and fraud.
Deutsche Bank clients are accused of using so-called cum-ex transactions on a systematic scale, Bild said.
The trades used loopholes in tax rules that allow a short-seller and actual holders of shares to both claim tax refunds on a dividend that was only paid once.
Streckert declined to comment on the newspaper’s report.
“More negative headlines are not helping Deutsche Bank’s image,” said Andreas Plaesier, an analyst with MM Warburg in Hamburg who recommends investors hold the shares. “These transactions have been investigated by tax authorities for a while and the probes also involve other companies.
The significance for Deutsche Bank shouldn’t be overestimated.”
Prosecutors in Frankfurt, Cologne and Munich are conducting various investigations over the issue against clients of several banks. There are cases pending at Germany’s top tax court which still has to rule whether the trades were illegal.
The latest investigation adds to Deutsche Bank’s legal woes, which have been a major financial hurdle and a distraction to its attempts to boost profitability.
In April, Deutsche Bank was ordered to pay a record $2.5bn fine and fire seven employees to settle US and UK. investigations into its role in rigging the London interbank offered rate. The penalty came on top of €7.1bn ($8bn) it spent on litigation in the previous three years.
The firm’s outstanding legal challenges include probes into the rigging of benchmark foreign-exchange rates, as well as investigations into mortgage- and asset-backed securities dealings and compliance with US sanctions.
Fitschen is currently also on trial along with other former Deutsche Bank CEOs on attempted-fraud charges. The men are accused of participating in a plot that included submitting false testimony and inaccurate legal documents in response to a multi-billion -euro lawsuit filed by the late media entrepreneur Leo Kirch and his heirs.
Jain will leave Deutsche Bank at the end of June, while Fitschen will step down early next year.

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