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Deutsche Bank Is Said Not to Plan More Reserves for Probes

Deutsche Bank AG for now doesn’t plan to put more money aside for two recent money-laundering probes that have pushed the shares to a record low, according to a person familiar with the matter.

The bank’s headquarters were raided last week in a German investigation, and the lender has been drawn deeper into a separate money laundering scandal at Danske Bank A/S. But internal probes have found no wrongdoing in either case, the person said, asking not to be identified in discussing internal deliberations.

Higher reserves would diminish prospects for the bank’s first annual profit in four years, as Chief Executive Officer Christian Sewing works to accelerate his turnaround plan and focus on growing revenue again. Shares of the lender slumped again Thursday amid a broader market selloff and as the slew of bad news threatens to undermine the CEO’s progress.

“The current management has conducted itself with a real focus on our compliance and our control systems,” James von Moltke, the bank’s chief financial officer, said in a statement. “We’ve made enormous investments and these investments are showing themselves.”

Deutsche Bank fell 4.7 percent in Frankfurt trading, bringing losses this year to 52 percent. That’s the worst performance among the major European lenders in 2018.

Panama Papers

Police searched the bank’s headquarters in Frankfurt and surrounding offices over two days last week in an investigation relating to a cache of documents known as the Panama Papers. They show a business based in the British Virgin Islands provided customers with a means to launder money, the bank has said. The inquiry touches the private wealth unit, part of the private and commercial bank run by Sewing before he rose to chief executive officer in April.

Two people singled out by prosecutors in the raids are still working at the bank, which has moved them to areas that do not touch the investigation. The employees are in good standing, the person said.

The raids came days after it emerged that an estimated $150 billion of a total of roughly $230 billion in possibly illicit client money at Danske Bank was funneled through the U.S. unit of Deutsche Bank over several years. The Financial Times on Thursday reported that the amount handled by the German company may have been even higher, with an additional $35 billion processed, according to a memo.

Deutsche Bank has said previously that as a correspondent bank, “your only relationship is with the bank and the bank itself has the responsibility to check its own client to monitor the transaction and to do all these kinds of checks.”

Von Moltke said Thursday that Deutsche Bank reduced the number of correspondent banking customers by 40 percent since 2016, and has stepped up efforts to fight money laundering and tax evasion. An official for Danske Bank declined to comment.

via Bloomberg


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