BaFin investigates Volksbank Köln Bonn over brothel loan

The German federal financial regulator, BaFin, has launched an investigation into Volksbank Köln Bonn regarding a 2021 loan used to finance the purchase of Pascha, one of Europe’s largest brothels located in Cologne. The loan was granted to Chinese investor Hu Jing for the acquisition of the nine-story complex.

The investigation focuses on potential misconduct within the bank’s leadership rather than the legality of the business itself, as prostitution is legal in Germany. Regulators are examining allegations that board member Juergen Neutgens may have received an unauthorized commission in connection with the approval of the credit.

In response to media reports, Volksbank Köln Bonn engaged an independent law firm in July to review the transaction and determine if there was any abuse of office. Neutgens, who has been on the board since 2018 and manages corporate clients and treasury, is currently on mandatory leave pending the results of the legal review. His legal representative has denied all allegations of illegal activity, stating that his client received no such payments.