Deutsche Bank raided by police in investigation into money laundering

German authorities descended on Deutsche Bank, including its Frankfurt headquarters, in a co-ordinated raid related to a money-laundering investigation.

Numerous 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 were two bank employees who were not identified beyond their ages – 50 and 46.

Authorities were also looking at whether others might have been involved. The bank said it was co-operating in what prosecutors described as a continuing investigation.

For the beleaguered German lender, the raid adds to a panoply of headaches – commercial, regulatory and legal – facing chief executive Christian Sewing and chairman Paul Achleitner.

The stock has lost almost half of its value this year, after sliding about 3 per cent 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 behaviour and not just a trivial offence,” said Stefan Mueller chief executive of DGWA, an investment advisory boutique in Frankfurt. He believes the bank will now be paralysed for months until it becomes clear how it will be affected by new potential fines.

“Maybe this time Achleitner will fall,” he said. 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 law company 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 from the Panama Papers exposed evidence Deutsche Bank helped clients set up offshore accounts, prosecutors said. The officials said the raid was not 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, prosecutors said.

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

The timing of the raid inflicts more pain on Deutsche Bank after a series of setbacks and repeated failures in keeping misconduct in check have pushed the shares to all-time lows.

Investor worries have mounted over its role as a correspondent bank in the multi-billion-dollar money laundering scandal at Danske. Germany’s markets regulator has taken the unprecedented step of appointing a monitor to oversee the firm’s efforts to improve money-laundering and terrorism-financing controls.