UPDATE 3-Police raid homes across Germany in tax probe
(Adds names of two banks searched, paragraph 7)
BERLIN, Feb 18 (Reuters) - Police investigating large-scale tax evasion linked to Liechtenstein raided homes and offices across Germany on Monday, and shares in the principality's banks plummeted on fears the affair could hurt business.
The tax-evasion scandal, which threatens to ensnare hundreds of rich Germans, came to light last week, when police raided the home of Deutsche Post (DPWGn.DE) Chief Executive Klaus Zumwinkel, forcing the company to announce his resignation.
German leaders said they would discuss financial transparency with Liechtenstein's Prime Minister Otmar Hasler when he visits Berlin later this week.
"I will be evaluating very carefully whether we need further initiatives at a European level to break up tax havens," Finance Minister Peer Steinbrueck said, adding he would discuss with Hasler how cooperation with the European Union could be improved.
Chancellor Angela Merkel said Liechtenstein had advanced on transparency issues but some questions remained to be resolved.
Police raided homes and offices in Frankfurt, Munich, and Hamburg, sources close to the inquiry said. About 1,000 people were targeted in the investigation, and the sources said more than 100 raids were planned for this week.
Private investment bank Bankhaus Metzler and private bank Hauck & Aufhaeuser both had premises searched, the firms said.
The finance ministry has said Germany paid for information that led to the probe, and media reported the BND intelligence service gave an informant about 4.2 million euros ($6.14 million) for a compact disk containing Liechtenstein bank data on more than 1,000 tax-evasion suspects.
Liechtensteinische Landesbank (LLB.S) said last week it had been blackmailed for years by someone threatening to sell client data. The bank's shares fell 12.42 percent by 1500 GMT, to 84.95 Swiss francs ($77.02).
Asked by reporters whether it was right to pay a potential criminal to obtain information, Merkel told reporters:
"We must not mix up cause and effect. The fact that tax evasion was committed is a fact that is regrettable and must be clarified and followed up ... Parliamentary bodies will be informed about the way the information was obtained."
DISCREET BANKING
Sandwiched between Austria and Switzerland, Liechtenstein is home to three mid-sized private banks -- Swiss-listed LLB and VP Bank (VPB.S) and the unlisted LGT Bank in Liechtenstein. Continued...
