Investigators search Deutsche Bank headquarters over legacy tax trades
Deutsche Bank Headquarters Searched Amid Tax Fraud Investigation
By Tom Sims and Matthias Inverardi
FRANKFURT, July 22 (Reuters) - German prosecutors searched Deutsche Bank's Frankfurt headquarters on Wednesday as they investigate alleged fraudulent tax transactions at its Postbank division between 2008 and 2010.
Germany's largest bank confirmed Duesseldorf prosecutors were at its offices in the German financial centre and that the probe related to transactions at Postbank.
"Deutsche Bank is being searched as a third party in this matter and we are cooperating fully," the bank said in a statement, declining to comment further.
Duesseldorf prosecutors said in a statement they had conducted searches in Frankfurt and elsewhere as part of a probe, but declined further comment due to tax secrecy rules.
Focus on Cum-Cum Trades
PROBE RELATES TO 'CUM-CUM' TRADES, SOURCE SAYS
A person familiar with the matter said the search involved so-called cum-cum trades, confirming German media reports.
Postbank offices in Bonn were also searched, they added.
How Cum-Cum Schemes Worked
Cum-cum schemes involved trading in stocks of German companies around dividend payout days, which authorities say amounted to tax fraud.
The transactions flourished during the financial crisis, and authorities estimated they stripped state coffers of billions. A years-long crackdown has since sought to claw back the money.
Financial Impact on the Industry
The alleged roles of German financial firms in cum-cum trades, as well as in related cum-ex deals, are likely to cost the industry around €7 billion ($8 billion), German financial watchdog BaFin said last week, citing a survey.
Previous Investigations and Postbank Acquisition
It marks the third time that prosecutors are known to have searched Deutsche Bank this year. An earlier case related to alleged money laundering, and a second last week concerned its retail bank.
Deutsche Bank bought Postbank, with its millions of clients and roots in Germany's postal system, in phases from 2008.
Recent Challenges for Deutsche Bank
In 2023, Deutsche Bank's years-long technology integration process with Postbank caused glitches and service lapses, resulting in scrutiny by its regulator. A year later, legal issues over its Postbank takeover pushed Deutsche Bank into a loss, breaking a long profit streak.
Suspects and Damages
Ten former managers at Postbank have been named by prosecutors as suspects, with alleged damages of €350 million to German state coffers, Sueddeutsche Zeitung reported. Prosecutors and Deutsche Bank declined to comment on the details.
(Reporting by Tom Sims, Writing by Ludwig Burger, Editing by Miranda Murray, Jan Harvey, Sabine Wollrab and Alexander Smith)
