German bank raided by prosecutors

The Frankfurt offices of German bank KfW have been searched by investigators following its transfer of 319m euros (£251m; $410m) to Lehman Brothers.

Authorities are investigating whether the transfer, which took place on the same day that US bank Lehman filed for bankruptcy, could have been prevented.

Prosecutors said they would determine whether board members had acted criminally in allowing the transfer.

State-owned KfW said it would co-operate fully with the inquiry.

A statement by the prosecutors said its investigation would discover whether KfW "violated legal obligations to safeguard assets... despite knowledge of signs of liquidity problems at Lehman Brothers".

KfW said it had mistakenly transferred the funds as part of a swap deal.

Last month, the bank sacked two board members over the transfer, which caused widespread embarrassment to the country's financial institutions and to the Berlin government.

German newspaper Bild called KfW "Germany's dumbest bank" when news of the transfer broke.