Due to a corruption investigation, Deutsche Bank ends business relationships with Rene Benko

Deutsche Bank cut ties with one of Europe's most prominent real estate developers out of fear over his involvement in an expansive corruption probe.

According to three sources familiar with René Benko's financial dealings, Germany's largest bank decided to end its business relationship with the Austrian real estate magnate who co-owns Selfridges in London, the Chrysler Building in New York, and the German department store KaDeWe.

People indicated that the only banking link Deutsche has maintained with Benko's €24 billion property empire is with the German department retailer Galeria Kaufhof, which filed for bankruptcy protection in October.

The writing was on the wall, according to a source close to Benko's real estate company, Signa Group.

In October, prosecutors in Austria named Benko as a suspect in a long-running corruption probe that has implicated famous businesspeople and politicians. In 2021, the investigation resulted to the resignation of country's chancellor Sebastian Kurz, a significant ally of Benko.

The participation of Benko in the case became apparent after authorities raided Signa's Innsbruck headquarters.

Signa Group and Benko have both denied any misconduct in regard to the probe and neither has been charged.

Some of the persons implicated in the investigation have privately accused prosecutors of targeting individuals with ties to the People's party, the conservative party in power in Austria, for political purposes.

Last month, Benko was exonerated of wrongdoing in a separate bribery investigation involving him and other real estate developers.

Deutsche Bank stated that it did "not comment on actual or potential client relationships."

A lawyer for Signa Group stated that the company had "no existing loans, no credit business or investment banking business with Deutsche Bank and is not in talks with Deutsche Bank about this." He noted that Deutsche Bank was not the group's primary bank.

In the past, Deutsche Bank has nevertheless offered commercial services to Signa businesses and helped to advise and finance the group. Deutsche was the joint bookrunner for a $300 million green bond issued by Signa in 2021 and supplied Benko with personal banking services.

According to sources familiar with the matter, the bank kept Galeria Kaufhof as a client because it believed it would be politically difficult to sever connections with Germany's largest department store chain in the midst of a restructuring.

Deutsche Bank is severing relations with Benko in an effort to decrease its exposure to clients who may pose a reputational risk.

Last year, it dropped Hertha Berlin as a client due to the Bundesliga football club's ties to financier Lars Windhorst, after it was reported that Windhorst was under investigation for alleged banking law infractions.

Hertha Berlin and Windhorst declined to comment.

By fLEXI tEAM