FRANKFURT (Reuters) - Deutsche Bank is being investigated by regulators looking to see whether it hired the children of Chinese government officials as a way to make connections and attract business, a source with knowledge of the probe told Reuters.
Other international banks such as JP Morgan have been probed by U.S. regulators regarding their hiring practices in China, where ties to political and business leaders can be key to winning big deals.
Deutsche Bank said in its prospectus for a 6.75 billion euro ($9.19 billion) rights issue it was cooperating with the enquiries which it said were focused on its hiring practices in the Asia-Pacific region.
It did not say which regulators or individuals were part of the investigations nor would it say whether the probes were at an early or advanced stage.
Separately, a source with knowledge of the investigation told Reuters that the probe related to Deutsche’s hiring in China.
The aim of the probe, Deutsche said, was to “determine if any candidates were hired on the basis of referrals from executives at governmental entities including state-owned enterprises in potential violation of the Foreign Corrupt Practices Act or similar laws.”
China’s state-owned firms and the children of party elders, known as “princelings”, enjoy many privileges and virtually monopolize certain sectors in the country.
Bank of America, Citigroup, Credit Suisse, Goldman Sachs and Macquarie have all employed relatives of top Chinese officials in past years.
Reporting by Arno Schuetze; Editing by Sophie Walker