German watchdog to scrutinise banks' tax haven business

FRANKFURT, April 22 Mon Apr 22, 2013 9:39am EDT

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FRANKFURT, April 22 (Reuters) - German financial markets watchdog Bafin will scrutinise German lenders' offshore wealth management businesses, it said on Monday, as a global clampdown on tax evasion intensifies.

The bank regulator's announcement followed word that Bayern Munich football chief Uli Hoeness is facing a tax evasion investigation involving a Swiss bank account.

"Our fact-finding effort is still at the conception stage," a Bafin spokesman said on Monday, declining to give detail on the likely content or timeline for the watchdog's enquiry.

Bafin's head of banking supervision, Raimund Roeseler, said earlier in a newspaper interview that the watchdog would start collecting data from banks about their offshore activities.

"The banks will have to explain to us exactly what they are doing there and with whom they are conducting business," Roeseler told Sueddeutsche Zeitung in the interview published on Monday.

Regulators around the world are seeking to root out tax evasion against a background of ballooning government debt.

The Group of 20 advanced and emerging economies on Friday endorsed automatic exchange of tax data among nations, calling it the expected new standard for how governments can help each other fight cross-border tax cheating.

Bafin has the power to conduct special inquiries at banks' offshore affiliates to check they are complying with the law, although data protection laws meant banks would not have to report on individual clients, Roeseler told the newspaper.

The watchdog has a range of powers to deal with any banks found breaking the rules, from issuing warnings to forcing executives to step down, depending on the gravity of the offence.

Roeseler said regulators would look at wealth management operations but did not identify individual banks or locations.

Data from the Bundesbank, which works jointly with Bafin on banking supervision, shows that German banks had about 152 billion euros ($199 billion) in claims on offshore banking centres as of February.

The Bundesbank's list of 22 offshore centres comprises: Guernsey, Jersey, the Isle of Man, Liberia, Bermuda, Panama, Anguilla, St. Kitts and Nevis, the Bahamas, Antigua and Barbuda, Cayman Islands, British Virgin Islands, Barbados, Montserrat, Aruba, Curacao, St. Martin, Lebanon, Bahrain, Singapore, Hong Kong and Vanuatu.

At the end of 2012, the asset and wealth management divisions of Germany's two biggest lenders, Deutsche Bank and Commerzbank, had 944 billion euros and 51 billion euros in assets under management, respectively.

HVB's private banking division had 25 billion euros in assets under management, while DZ Privatbank, the wealth management unit of Germany's cooperative banks, had 13.5 billion euros in assets under management.

DZ Bank was not immediately available to comment and the other banks declined comment. ($1 = 0.7644 euros) (Reporting by Jonathan Gould and Edward Taylor; Editing by Mark Heinrich)

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