It appears increasingly likely that the head of Germany’s financial regulator BaFin could face criminal charges for allegedly overstepping his authority.
Jochen Sanio, who headed Bafin from 2000 to 2012, has been the subject of an investigation by state prosecutors in Cologne since August over his role in the 2009 rescue of Germany’s then-largest private bank Sal. Oppenheim.
At the height of the crisis, with its own solvency on the line, Sal. Oppenheim received a €100-million ($129 million) loan from its more well-heeled subsidiary, BHF Bank.
Mr. Sanio faces possible charges of breach of trust and attempted blackmail for allegedly forcing BHF Bank to make the bridge loan to its corporate parent. New details obtained by Handelsblatt suggest the investigation by prosecutors is gathering steam, after they received a “treasure trove” of documents, according to a person familiar with the probe who declined to be named.
Should it come to a formal prosecution, a trial against the former banking regulator would mark a first in German legal history and a first for a large country in the aftermath of the 2008 financial crisis. Mr. Sanio was not alone in intervening actively to keep the financial system afloat. Regulators around the world prodded and pushed banks to restructure and in some cases, be sold after the U.S. housing market collapsed, exposing a mountain of bad debt that led to the Lehman Brothers bankruptcy.