San Francisco Frontiers - Money laundering probe overshadows Deutsche Bank's record profits

Germany's biggest lender reported pre-tax profits of 9.7 billion euros ($11.6 billion) for last year, an 84 percent jump on 2024, extending a run of good performance in part due to higher long-term interest rates.

But the shine was taken off the results by the money-laundering investigation, which saw prosecutors and police raid the bank's headquarters in Frankfurt and its office in Berlin on Wednesday.

Media reports said it was linked to Abramovich, who has been sanctioned by the European Union.

The investigation is a blow for a bank that had worked hard in recent years to shed its reputation as a magnet for scandals, and CEO Christian Sewing sounded disappointed.

"We had actually hoped that your full attention this week would be focused on our annual results," he told reporters.

"Since yesterday, we know that this is not entirely the case," he added, while refusing to answer questions when asked about the bank's past business with Abramovich.

Sewing nevertheless struck an upbeat note about Deutsche Bank's results and future prospects, saying it had hit all its 2025 goals.

"This gives us the strongest possible foundation for the next phase of our strategy," he said, adding that the bank aimed to become "the European champion".

Earnings rose last year across all main divisions, including investment and corporate banking as well as asset management, and revenues were up seven percent to 32.1 billion euros.

Net profit attributable to shareholders was 6.1 billion euros, more than double that of 2024, when it was weighed down by legal costs related to a troubled takeover.

Its shares fell two percent in Frankfurt Thursday after the results were released.

- Run of scandals -

The Sueddeutsche Zeitung newspaper reported details of the money-laundering probe, which it said involved the bank's dealings with companies linked to Abramovich.

Abramovich, who had ties to Russian President Vladimir Putin and is the former owner of English football club Chelsea, was sanctioned by the EU following Russia's full-scale invasion of Ukraine in 2022.

Prosecutors have not confirmed who was being targeted.

Sewing said the probe involved allegations that a report related to suspected money-laundering was filed late, and concerned transactions between 2013 and 2018.

"We are of course cooperating fully with the authorities," he added.

Deutsche Bank has faced scrutiny on several occasions in recent years over suspicious transactions, and has previously been fined for failing to report suspicious activity quickly enough.

The bank also ran into trouble after expanding aggressively in the early 2000s in a bid to compete with Wall Street giants.

It was drawn into multiple scandals, and was hit in 2017 with a multi-billion-dollar fine in the United States to settle lawsuits over its role in the "subprime" mortgage crisis, which contributed to the global financial crisis.

The lender, which has almost 90,000 employees, has undergone a major restructuring under Sewing, focusing more on Europe and corporate and retail banking, and shifting away from overly risky investment banking activities.

D.Brown--SFF