STATE PROSECUTORS in Leipzig have said they are not investigating any Irish former staff of the defunct German state bank Sachsen LB.

On Tuesday, German investigators raided 28 homes and offices in six federal states across the country as part of their investigation into five former board members of the bank, sold last year after it became Germany's most prominent credit crunch victim.

The five face charges of improper accounting and breach of trust, which, in the case of conviction, can result in financial penalties or up to three years in prison.

The Garda was involved in the raids, visiting the offices of the defunct bank's Dublin subsidiary on George's Quay, where they gathered files at the request of Germany's federal police.

"We are not investigating any Irish citizens or persons living in Ireland," said a spokesman for the Leipzig state prosecutor's office.

The Irish Financial Services Regulatory Authority said it was aware of the search of the bank's Irish premises. "The financial regulator has confirmed that the staff of the Irish entity are co-operating fully," it said.

The Saxon state bank was hit by the subprime fall-out a year ago and required a €17.3 billion credit line to cover debts run up by its Dublin subsidiary in off-balance-sheet dealings.

In December, another state bank, the Landesbank Baden-Württemberg (LBBW), agreed to buy Sachsen LB, but only after the federal state of Saxony provided a state guarantee of €2.75 billion to cover any further debts from risky dealings.

Leipzig prosecutors said the raids were based on the "preliminary suspicion" that five board members kept Sachsen LB's supervisory board in the dark about the full risks associated with Irish off-balance-sheet deals.

"The suspicion is that they circumvented the control mechanisms and did not fulfil their obligations, while knowing the full risks, namely that the credit levels at stake comprised several times the bank's own equity level," said a source at the Leipzig state prosecutor's office.

The raids are the most public stage of an investigation that began a year ago. A parliamentary investigation has already claimed the heads of several senior politicians in Saxony, including premier Georg Milbradt. As Saxon state finance minister in the 1990s, he was a key figure in setting up the bank.

The architect of the Sachsen LB Europe (SLLBE) business was investment banker Claus Wilsing. Hired in 1998, he built up the bank's asset-backed securities activities in Dublin and convinced his bosses to agree to a "valuation agreement", covering all Irish dealings with a German state guarantee.

Mr Wilsing was viewed as a wunderkind in Leipzig for producing fantastic profits with business dealings so complex that, as one German business magazine put it, the "organigrams resembled sketches of the plumbing in the Queen Mary".

Assisting Mr Wilsing was Irish financier Adrian Fitzgibbon. The two increasingly concentrated on off-balance-sheet instruments which would eventually bring the bank to the brink of ruin.

Leipzig prosecutors declined to say whether they have been in contact with Mr Wilsing or Mr Fitzgibbon.