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UPDATE 1-Deutsche puts HK traders on leave after anti-graft agency arrests

Published 04/15/2011, 05:57 AM
Updated 04/15/2011, 06:00 AM
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* German bank says two Hong Kong traders suspended after arrests

* HK anti-graft agency arrested 11 for alleged bribery

* Deutsche "fully assisting" Hong Kong investigation (Adds details of arrests, share performance)

HONG KONG/FRANKFURT, April 15 (Reuters) - Deutsche Bank AG has put two Hong Kong traders on leave after they were arrested by the city's anti-corruption agency for alleged fraud, the German bank said on Friday.

The Independent Commission Against Corruption (ICAC) said on Thursday it arrested 11 people "for alleged bribery in relation to fraudulent trading of derivative warrants issued by a bank."

The ICAC did not identify any of the people detained or the bank involved.

"Deutsche Bank was advised by the ICAC of the arrest of two employees, both warrants traders in Hong Kong. The two traders were immediately placed on leave from the bank until the matter is resolved," a bank spokesman said. "Should the allegations be found to be true, they will be held fully accountable. Deutsche Bank is not under investigation and it is fully assisting the ICAC with their enquiries."

The arrests come at a time when Deutsche Bank is under scrutiny across the globe.

After South Korean regulators imposed a trading suspension on the bank's local brokerage unit in February, a U.S. Senate panel on Wednesday said Deutsche and other banks contributed to "the mortgage mess" that culminated with a collapse of the real-estate market in 2007. [ID:nN13275638]

Deutsche's shares were down 0.9 percent on Friday to trade at 41.22 euros. The stock dropped nearly 3 percent on Thursday on concern over the U.S. probe. [ID:nLDE73D1C1]

South Korean regulators in February suspended for six months some operations by Deutsche's local brokerage unit after ruling the bank had manipulated the stock market. [ID:nTOE71L035]

Deutsche Bank's trading volume of warrants was among the top five in the past year in Hong Kong, accounting for 8 percent to 9 percent of the total, the Hong Kong Economic Journal reported on Friday.

Recently, its market share slumped to less than 1 percent, the daily added. (Reporting by Elzio Barreto and Edward Taylor; Editing by Chris Lewis and Lincoln Feast)

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