Raid at Deutsche Bank: Investigators Examine Former Postbank Cum-Cum Transactions

According to an insider, the raid concerns suspicion of "Cum-Cum" transactions by Postbank. The background to the searches was the Postbank's "Riesling" project, which apparently involved controversial tax deals, the "Süddeutsche Zeitung" reported. Specifically, it concerns so-called cum-cum transactions of the Postbank, then based in Bonn, from the years 2008 to 2010.

In "Cum-Cum" transactions, foreign investors passed their shares shortly before the dividend record date to German banks or funds, which — unlike them — did not have to pay capital gains tax on the dividend. After the record date, they got the securities back; as a "reward," the domestic parties received a portion of the dividend. The investigators assumed a loss to the treasury of more than 350 million euros.

Deutsche Bank's Response

All ten are being investigated on suspicion of joint tax evasion. According to the report, they are said to be responsible for the Postbank having submitted incorrect or incomplete corporate income tax returns between 2008 and 2010.

According to its own statements, Deutsche Bank is only affected by the investigation as a third party — meaning it is not the focus of it. To its knowledge, the subject of the investigation is transactions of its current subsidiary Postbank from the years 2008 to 2010, when it had not yet been fully taken over by the Frankfurt-based bank. Deutsche Bank entered the then Bonn-based Postbank in 2008, secured a majority stake in 2010, and fully legally integrated Postbank in 2018.

A Deutsche Bank spokesperson stated: "Wir bestätigen, dass in den Geschäftsräumen der Deutschen Bank eine Maßnahme der Staatsanwaltschaft Düsseldorf durchgeführt wird." She asked for understanding that the bank could not comment further beyond that. The bank announced it would support the authorities "vollumfänglich."

Scale of the Searches

The Düsseldorf public prosecutor's office was initially unavailable for comment and later referred to tax secrecy. The North Rhine-Westphalian Ministry of Finance also stated that, due to tax confidentiality obligations, it could not provide further information.

According to the NRW Ministry of Finance, 150 employees of the state office of criminal investigation for combating financial crime searched business and private premises in several German cities, including in North Rhine-Westphalia. Only last week, the Frankfurt public prosecutor's office confirmed a raid on a Deutsche Bank branch at the Frankfurt Taunusanlage, but did not comment on the exact background. Earlier in the year, bank offices were searched on suspicion of money laundering.

Cum-cum transactions are considered the larger variant of cum-ex deals. While cum-ex involved the refunding of capital gains tax that had never been paid, cum-cum deals gave foreign holders of German shares tax advantages. Cum-cum transactions are estimated to have caused tax damage of 28 billion euros, and thus significantly more than cum-ex transactions. The German Finance Ministry had stated that it considers "Cum-Cum" transactions to be unlawful in most cases.

Deutsche Bank is the legal successor of Postbank and is therefore the target of the current searches. As Germany's largest bank, it thus finds itself confronted once again within a short period of time with searches by prosecutors and tax investigators.