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Deutsche Not So Squeaky Clean

Deutsche Bank investigated

Image source: Martynova Anna, yunro - flickr

What's going on?

Shares of Germany’s Deutsche Bank fell 4% on Thursday after news broke that the company’s headquarters were raided by police officers. Gott im Himmel!

What does this mean?

Deutsche’s offices were searched as part of an investigation into alleged money laundering activity on the back of the “Panama Papers”. The bank is suspected of shunting as much as $350 million of dirty money to international tax havens on behalf of 900 or so customers, while failing to report any suspicious activity. Deutsche is fully cooperating with the investigation.


This isn’t the first time Germany’s biggest bank has been in the naughty corner. In 2015, it was fined around $45 million by the country’s financial regulator for having flawed anti-money laundering systems. Last year, Deutsche paid nearly $700 million in fines for laundering money between the UK, Russia, and the US. And just this month, Deutsche was found to have processed $150 million dollars of suspicious payments for Danske Bank linked to – you guessed it – money laundering.

Why should I care?

For markets: When it rains… es gießt.

Deutsche has been struggling for a while – the company hasn’t turned an annual profit in three years, and its shares are down roughly 50% in 2018. In April the bank brought in a new CEO who investors hoped would turn things around by focusing on savings and loans over riskier investment banking – but that’s still a work in progress. A host of big financial firms have been in hot water recently – and all those fines aren’t great for share prices.



The bigger picture: Change over the Channel.

The Bank of England said on Thursday that British banks’ finances should be able to withstand even a rough Brexit – agreeing with the European Banking Authority. The annual “stress tests” analyze how banks would cope if the economy took a turn for the worse; in short, they’d keep calm and KBO.

Originally posted as part of the Finimize daily email.

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