Bank employees are suspected of having helped investors transfer money to Switzerland, circumventing tax authorities, the spokesman for prosecutors in the German city of Mannheim, Peter Lintz, told Reuters.

UBS's Frankfurt offices were raided in May and electronic data and other material that was obtained at the time is currently being analyzed, he added.

The legal inquiry is directed against unknown representatives of UBS's German division.

Stuttgarter Nachrichten, the German daily which reported the investigation earlier on Thursday, said funds had been moved illicitly via an internal clearing account at UBS's German branch into Switzerland. The paper did not specify the source of its information.

Illicit money transfers lasted well into 2012, it said.

Swiss banks have been subject to investigations into tax evasion in the United States and Europe, throwing Swiss banking secrecy, enshrined in the republic's laws and traditions, into jeopardy.

Earlier this year, a number of French offices of UBS were searched as part of a probe into alleged aiding of tax evasion.

UBS in August denied media reports it was telling wealthy Germans to move funds to Singapore and other money centers ahead of a Swiss tax deal due to come into force in January.

Asked about the Mannheim probe, a spokeswoman for UBS said in a written statement late on Wednesday that the bank is "cooperating with authorities" but declined to comment on ongoing legal procedures.

Since 2009, UBS has closely examined its "framework conditions" for business with over 60 countries including Germany and taken steps to adjust or improve rules wherever necessary, the spokeswoman said. (Reporting by Hendrik Sackmann, Andreas Cremer and Ludwig Burger; Additional reporting by Edward Taylor in Frankfurt; Editing by Andrew Hay)

• A Permanent Economic Emergency