Offices raided as prosecutors probe Landesbank heads

City A.M. Reporter
GERMAN state prosecutors yesterday searched the offices of the country&rsquo;s biggest state-owned bank, Landesbank, as well as board members&rsquo; private residences, over suspected breach of trust.<br /><br />The probe is targeting six current management board members as well as former chief executive Siegfried Jaschinski for severe breach of trust in connection with risky investments in US securities, Landesbank (LBBW)and Stuttgart prosecutors said yesterday.<br /><br />A source familiar with the situation said current chief executive Hans-Joerg Vetter was not a target of the probe.<br /><br />The investigation is focused on investments worth hundreds of millions of euros in mortgage-backed securities made since the end of 2006, despite recognisable market risks, which may have damaged or put at risk the bank&rsquo;s assets, prosecutors said.<br /><br />The executives are suspected of having failed to stop the investments even though the US mortgage market -- then on the verge of collapse -- &ldquo;held incalculable risks&rdquo;, the prosecutors said.<br /><br />Resulting losses cannot yet be determined but are likely to be in the millions of euros, the prosecutors and the criminal investigation office of the state of Baden-Wuerttemberg said.<br /><br />Around 240 investigaters and police began searching LBBW&rsquo;s offices yesterday morning and 10 private residences were also targeted, investigators said. LBBW is cooperating with the investigation, a spokesman said.