Deutsche Bank 'victim of fraud'

DEUTSCHE BANK yesterday claimed it was the victim of systematic fraud in its dealings with Jurgen Schneider, the fugitive tycoon, which could cost it several hundred million marks.

Mixing contrition, defiance and reassurance, Hilmar Kopper, Deutsche's chief executive, said the real victims of the property group's collapse were the banks, which had been criminally deceived.

Mr Kopper said the gravest mistake of Deutsche Bank, which is owed DM1.2bn ( pounds 470m) by the Schneider group, 'was that we allowed ourselves to be deceived. This hurts our sense of honour'.

The credit fraud was prepared and committed intentionally and systematically, he said. The scale of the deceit made it unlikely that Mr Schneider had acted alone.

'What is absolutely clear is that Centralboden (Deutsche's mortgage unit) received falsified reports from publicly appointed official valuers and that manipulated tenancy agreements were used,' Mr Kopper said.

He added that the real damage was the way in which his bank 'has been criticised and ridiculed to an almost unprecedented degree'.

He did not rule out staff changes while the bank repaired its reputation, but added: 'There will be no scapegoats at any level of our organisation. It is not Deutsche Bank's style to send people packing as a sop to public opinion.'

An internal inquiry is under way, concentrating on the control system at Centralboden.

While the reputation of German banking had been damaged there was no question of a crisis of confidence in the system, Mr Kopper said. 'For Deutsche Bank group the Schneider exposure makes up roughly three-thousandths of our lending volume,' he added.

Mr Schneider, who owed 50 banks more than DM5bn and left DM250m worth of unpaid bills, has not been seen since before Easter.