Deutsche Bank’s difficult week continued Friday with prosecutors raiding the lender’s offices in Frankfurt, Germany, for a second straight day.
The latest raids were said to have included the offices of its board members, a sign the investigation about the bank’s role in a global money-laundering scandal is widening.
The bank’s shares fell to yet another record low — they were down about 3.3% on Friday, taking its year-to-date plunge to a whopping 50%. The market capitalization of the once mighty bank is now about $19 billion, not a significant amount more than the bank has had to pay in fines since the financial crisis. Bloomberg reported that all eight of the bank’s board members’ offices were searched as part of the raids.
The bank has been dogged by high levels of executive turnover and legal fines, and it is on the back foot again after successive CEOs have pledged to turn the bank around. CEO Christian Sewing was appointed in April with the intention of improving performance at the lender.
It’s been a rough few weeks for Deutsche Bank. The bank’s head of the Americas, Tom Patrick, is thought to be leaving the bank as part of a major reshuffle at the beleaguered lender. He is the third person to hold the role in the past 18 months. And the Financial Times reported that questions had swirled around the performance of the investment division’s head, Garth Ritchie, after revenue at that division plunged.
The bank’s list of problems grew further last week when Deutsche Bank’s role in Danske Bank’s money-laundering scandal came to light. The shares tumbled again after Citigroup CEO Michael Corbat dismissed talk of a merger between the two lenders.
That was all before Thursday, when about 170 police officers and other officials seized documents during searches through six properties, including one employee’s home.
The plot thickens
An odd twist in the saga comes from The Wall Street Journal, which reported Thursday that the Federal Reserve’s vice chairman for supervision, Randal Quarles, turned up for a lunch with Sewing and the German bank’s regulatory chief, Sylvie Matherat, during the raid.
A Fed representative told The Journal the lunch was prescheduled and unrelated to the raids. The timing was nevertheless odd given that Matherat is responsible for a department that deals with the detection and prevention of financial crimes by clients of the bank. Matherat’s office was said to be raided as part of the investigation, The Journal reported.
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