UPDATE 2-German prosecutors seek charges against Deutsche Bank co-CEO in Kirch case-sources
* Prosecutors conclude investigation, seek charges
* Court must now decide whether to charge co-CEO Fitschen
* Deutsche Bank says suspicions of wrongdoing unfounded (Adds investor comments, share price)
By Jörn Poltz and Kathrin Jones
MUNICH/FRANKFURT, Aug 12 (Reuters) - German prosecutors are seeking charges against Deutsche Bank co-CEO Juergen Fitschen and several former executives at the bank in connection with the long-running Kirch bankruptcy case, legal sources said on Tuesday.
The decision to pursue charges, while widely expected, is a serious blow to Fitschen and Germany's largest bank, which faces an array of legal problems, including investigations into possible manipulation of benchmark interest rates and foreign exchange markets.
Prosecutors have been investigating whether Fitschen, his predecessors Josef Ackermann and Rolf Breuer, and others gave misleading evidence in a civil suit, brought by heirs of the late media magnate Leo Kirch, which ended in February after 12 years of legal wrangling.
A Munich court must now decide whether to accept the case and press charges, a decision expected to take several months.
Deutsche Bank said it had received no written notice of the prosecutor's decision.
"Deutsche Bank fundamentally does not comment on ongoing cases and points to earlier statements that the bank is convinced that any suspicion against Juergen Fitschen will be shown to be unfounded," the bank said in a written statement.
Fitschen and Anshu Jain, the former head of Deutsche's investment bank, took over as co-CEOs in 2012. The leadership duo has been dogged by legal woes stemming from the bank's conduct during the global financial crisis as they work to meet strict new capital requirements from regulators.
Kirch, who died in 2011, blamed the country's largest lender for his group's demise, setting off one of Germany's most acrimonious corporate disputes, which was settled in a deal costing Deutsche about 925 million euros.
But Fitschen is expected to weather the threat of charges and the possibility of a trial.
German banking supervisor Bafin has signalled that it will take no action against Fitschen if the court decides to press charges, leaving Fitschen free to manage the bank and defend himself at the same time.
Likewise, the bank's supervisory board, which oversees management, will support Fitschen if the case comes to trial, two sources on the supervisory board have told Reuters.
Fitschen's predecessor Ackermann ruled Germany's largest bank while spending months in the courtroom as a defendant in the Mannesmann case in 2006. Ackermann and other defendants ultimately ended the case by agreeing a cash settlement with authorities.
"Mr. Fitschen does not need to resign right now. But should it result in a conviction, that would need to be reassessed," said attorney Klaus Nieding, head of the German small-shareholders association DSW.
But some shareholders were not as sanguine. Speaking under the condition of anonymity, one major stockholder in the bank said: "Already the fact that charges will be filed against one a management board head is shameful and damaging to the bank."
Shares in Deutsche Bank were up 0.4 percent late on Tuesday, roughly in line with a 0.7 percent rise in the Stoxx index of European banks .SX&P.
Earlier this month, a German court halted a bribery trial against Bernie Ecclestone, chief executive of Formula One, in exchange for a $100 million fee. [ID: nL6N0QB488]
These cases point to the possibility that Fitschen, too, may eventually choose to settle any case rather than endure a potentially long and distracting courtroom proceeding.
A senior source within the bank, however, told Reuters that the 63-year-old Fitschen is adamant about his innocence and would rather endure a trial than let a settlement leave a blemish on his career.
Fitschen's personal lawyer declined to comment, as did the lawyers representing former CEOs Ackermann and Breuer.
A spokeswoman for the court also declined to comment.
The Munich prosecutors' office said it had concluded its investigation but declined to comment further.
"Due to legal reasons we cannot issue a statement until all the parties have been properly informed about the process," the prosecutor said in a statement. (Writing by Thomas Atkins; Editing by Noah Barkin and Sophie Walker)
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