HAMBURG, July 9 A German court acquitted
ex-managers of bailed-out German lender HSH Nordbank of
charges including accounting fraud in a high-profile case
stemming from the financial crisis, a decision that may have
implications for other similar lawsuits.
Former Chief Executive Dirk Jens Nonnenmacher and former
capital markets head Jochen Friedrich were acquitted of charges
that included breach of fiduciary trust and accounting fraud, as
the court found they did not intentionally violate their
obligations. "The defendants are acquitted," judge Marc Tully of
the Hamburg district court said.
The HSH trial was one of the first cases of a European
bank's entire executive board being tried for actions taken in
the run-up to the financial crisis.
Prosecutors had sought suspended sentences of up to one year
and 10 months as well as fines of up to 150,000 euros
($204,600)for the former HSH directors, who had pleaded not
HSH - along with other regional state-owned German lenders
known as landesbanks - lost billions of euros on risky
investments in the financial crisis. This forced its owners -
the state of Schleswig-Holstein, the city of Hamburg and local
savings banks, or sparkassen - to prop it up with a 3 billion
euro capital injection and additional 10 billion euros in loan
The bank said it would still seek to claim damages from the
former managers in civil court proceedings.
The prosecutor had accused the bank's managers of improperly
accounting for a deal dubbed "Omega 55" which they struck to
make the balance sheet appear stronger ahead of a planned
listing on the stock exchange.
Since the financial crisis, policymakers globally have
introduced new banking rules aimed at preventing taxpayers from
having to bail out banks in the future, but few bank executives
have faced court actions.
The collapse of Iceland's banking system six years ago
resulted in convictions, with the former chief executive of
failed bank Glitnir among those given prison sentences.
Germany has seen isolated high-level convictions but no
prison sentences. The former CEO of corporate lender IKB
was convicted of market manipulation and received a
10-month suspended sentence.
A criminal case against former managers of bailed-out LBBW
for accounting fraud ended with a settlement in which
the court ordered them to make payments to charities.
Bosses at Ireland's Anglo Irish Bank faced trial in 2014,
five years after the probe into the lender began. In April,
however, a judge ruled that two former senior executives were
"led into error and illegality" by the country's financial
regulator and handed them community service.
In Britain, where Royal Bank of Scotland and Lloyds
were bailed out for around 66 billion pounds ($112.31
billion), no senior bankers have faced criminal charges.
In the United States last November, a former Credit Suisse
Group trader became the most senior Wall Street
official to go to prison for criminal conduct during the crisis.
Kareem Serageldin, the bank's former global head of
structured credit, was sentenced to 30 months in prison for his
role in a scheme to artificially inflate subprime mortgage bond
($1 = 0.7331 Euros)
($1 = 0.5877 British Pounds)
(Reporting by Jan Schwartz; Additional reporting by Kirsten
Ridley in London; Writing by Arno Schuetze; Editing by Thomas
Atkins and Jane Merriman)