Deutsche Bank Defends Itself With Stock Near All-Time Low -- Update

By Jenny Strasburg

Deutsche Bank AG, its shares trading near all-time lows, sought Thursday to reassure investors about the German bank's stability following a fresh wave of negative news, including a surprise raid on its Frankfurt headquarters last week.

Finance chief James von Moltke said in a televised interview that Deutsche Bank experienced a "very muted client response" to last week's raid by German authorities of Deutsche Bank offices in a money-laundering and tax-evasion probe.

"To date, we're not aware of any wrongdoing on our part," Mr. von Moltke said in the interview Thursday with CNBC. Bank executives had no prior knowledge of the investigation, he said.

Last week's raid was expected to be discussed at a multiday meeting of Deutsche Bank's supervisory board ending Thursday, according to people close to the bank.

Frankfurt prosecutors swarmed the bank and a Deutsche Bank employee's home with 170 officers over two days. They said their investigation stemmed from documents in the so-called Panama Papers leak of records in 2016 about a now-defunct Panamanian law firm that specialized in offshore holding companies.

Deutsche Bank has said it previously handed over "all the relevant information regarding Panama Papers," and it is cooperating in this investigation as well.

Mr. von Moltke said on Thursday that Deutsche Bank's financial targets remain unchanged, meaning it still expects to make a profit this year for the first time since 2014. He said the bank's capital and liquidity positions are strong, reflecting Deutsche Bank executives' repeated need to reassure clients and investors about the lender's fundamental soundness.

Deutsche Bank shares were down about 4% in afternoon trading Thursday in Frankfurt, roughly in line with European banks amid broader market declines. Deutsche Bank shares have fallen 51% this year to all-time lows below EUR8 ($9.08).

Deutsche Bank on Thursday and last week defended senior executives. Improving compliance and money-laundering controls "has been a real emphasis of current management," and the bank has made "enormous investments" in fighting financial crime, said Mr. von Moltke, who joined the bank in 2017, in the CNBC interview.

Seven months ago, Deutsche Bank fired Chief Executive Officer John Cryan and replaced him with longtime employee Christian Sewing. Deutsche Bank is again on the defensive, facing new legal threats and persistent doubts about its ability to make money.

A stepped-up focus by investigators on activities in the private bank, previously run by Mr. Sewing, has helped fuel investor concern that current management could get swept into new legal problems. Last week German investigators searched offices of management-board members in Frankfurt as part of their raid.

One of those executives, Sylvie Matherat, the bank's regulatory chief, oversees the division responsible for detecting and preventing financial crime by clients of the bank. The Wall Street Journal reported last week that she has come under pressure amid discussions of a potential management shake-up, citing people close to the bank. There was no indication Thursday of an imminent change in management.

Deutsche Bank also this year attracted scrutiny as a primary handler of U.S. dollar transactions through scandal-ridden Danske Bank's Estonian branch, the subject of multiple money-laundering investigations. Deutsche Bank executives have played down the lender's role as a so-called correspondent bank for Danske in the past, saying Deutsche Bank didn't have front-line responsibility to monitor Danske Bank's clients but was an intermediary.

Write to Jenny Strasburg at jenny.strasburg@wsj.com

(END) Dow Jones Newswires

December 06, 2018 12:09 ET (17:09 GMT)

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