Police raid Luxembourg banks and lawyers

A newly-created police unit in Düsseldorf has spent months investigating Luxembourg banks and their German subsidiaries on suspicion of helping clients evade tax and launder money, triggering a wave of raids on Tuesday.

Police raid Luxembourg banks and lawyers
Commerzbank headquarters in Frankfurt. Photo: DPA

The Süddeutsche Zeitung (SZ) reported on Wednesday that the “Organized Crime and Tax Fraud” (EOKS) unit suspect numerous Luxembourg banks and up to 90 lawyers and wealth managers of helping German customers evade tax using shell companies in Panama.

Colleagues in other German states, including Hesse, North Rhine-Westphalia and Rhineland-Palatinate, searched the premises of Luxembourg nationals suspected of involvement, as well as the Commerzbank branch in Frankfurt, on Tuesday.

The subsidiary of Luxembourg-based Commerzbank-International is suspected of years-long, systematic assistance to those seeking to evade taxes.

Police have a database of hundreds of alleged tax frauds and accusations of money laundering are following close behind.

A Commerzbank spokesman said that the bank had “an interest in a quick, comprehensive clarification and obviously supports the authorities actively and completely.”

Investigators in Frankfurt seized documents and email records, containing lists of names of offshore firms, copies of passports belonging to the straw-man directors of the companies, and the names of the real owners.

The spokesman said that the cases were being investigated “internally” in co-operation with the authorities, and that the bank had been asking suspicious customers to “clarify” their tax status since 2009.

It had forbidden even referring customers to people offering shell companies since 2007, he added.

Other German subsidiaries of Luxembourg banks remain under suspicion, and investigators believe that the parent companies there were aware of the underhand dealings in Germany.

Much of the tax evasion dates back to 2005, when an EU law setting up a 15 percent – and later 35 percent – tax on interest charged to citizens of other EU member state was passed in Luxembourg.

Many of the offshore shell companies were set up to hide money and avoid the tax.

SZ also reports on a case when German investigators were refused access to Luxembourg to search the premises of a financial adviser, who had been named by German tax frauds as having helped them.

Luxembourg state prosecutors said that the man was “not relevant in this case” – despite the confessions of the tax evaders – as he had done nothing more than deposit money in different companies.

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Germany’s Commerzbank to cut 10,000 jobs and close 340 branches

Germany's second-largest lender Commerzbank said Thursday it will cut 10,000 jobs and close 340 branches by 2024 as it grapples with a switch to online banking and cashless payment options.

Germany's Commerzbank to cut 10,000 jobs and close 340 branches

The cuts will affect one in three jobs in Germany, the Frankfurt-based lender said in a statement.

“As part of a wide-ranging digitalisation, the bank will substantially reduce its branch network from the current level of 790 to 450,” it said.

“Compared to the figures expected for 2020, costs will be reduced by €1.4 billion or around 20 percent by 2024.”

Like its crosstown rival Deutsche Bank, Commerzbank had already announced thousands of job cuts as it struggles to adapt to a reduced need for bricks-and-mortar branches.

The troubled lender had already announced 2,900 job losses over the course of 2020 and said in December it was booking €610 million in additional provisions to finance the cuts.

It was not clear whether these job cuts were included in Thursday's figure.

The lender posted a €69 million net loss in the third quarter of 2020, during which it closed 200 branches.

READ ALSO: Germany's Commerzbank to slash 4,300 jobs

At the end of September, it had 39,600 employees.

Commerzbank said it would likely end the year with a net loss for the first time since 2009.

The task of getting the bank back on track will fall to its new boss from the start of 2021, Manfred Knof, a defector from Deutsche Bank.

The proposed cuts will be discussed at a supervisory board meeting in February, it said.

Commerzbank “intends to focus and digitalise its business model, considerably reduce costs in all areas, and significantly increase its profitability by 2024,” it said.