Rogue BaFin?

Was it Blackmail? Case Against Former Banking Supervisor Gets Serious

BafinSanioResized
Former banking regulator Jochen Sanio could be charged with attempted blackmail for his role in rescuing banks during the 2008-2009 financial crisis.
  • Why it matters

    Why it matters

    The case against the former banking regulator is a first in Germany and could redefine the limits of its domestic finance regulator in the aftermath of the 2008 crisis.

  • Facts

    Facts

    • Jochen Sanio was president of German bank regulator BaFin from 2000 to 2012.
    • Bankhaus Sal. Oppenheim received a €100 million loan from a subsidiary, BHF Bank, in 2009.
    • State prosecutors are investigating whether the loan was improper and influenced by Mr. Sanio.
  • Audio

    Audio

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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.

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