This article is more than 11 years old

This article is more than 11 years old

German prosecutors and police today raided the Frankfurt headquarters of state-owned bank KfW, looking into a case suspected criminal breach of trust.

Prosecutors said they had opened an investigation into whether the bank's executives acted criminally in allowing KfW to transfer €319m (£251m) to US investment bank Lehman Brothers on the day it went bankrupt.

The investigation has been set up to establish whether executives breached their fiduciary duties – the legal relationship of trust – by failing to prevent the transfer when knowledge of Lehman's liquidity problems were already in the public domain.

Peer Steinbrueck, the German finance minister and a KfW supervisory board member, and other ministers knew about Lehman's difficulties throughout the weekend before the American bank went bust on Monday September 15.

When news of the transfer broke, enraged cabinet ministers forced the resignation of two executive board members of what became labelled Germany's "dumbest bank". The head of risk management also quit.

KfW said today it was cooperating fully with state prosecutors and the federal criminal police (BKA) and handing over all relevant documents and information.

The bank led the rescue of industrial lender IKB, one of the first European banks to be hit by the US sub-prime crisis in August 2007, and handled its subsequent takeover a year later for a knock-down price by Texas-based private equity firm Lone Star.