By Edward Taylor

FRANKFURT (Reuters) - Deutsche Bank <dbkgn.de> on Wednesday said its Frankfurt offices were being searched by prosecutors probing a tax evasion scheme involving the trading of carbon permits.

Separately, the Frankfurt public prosecutor said it had searched the offices of a big bank in Frankfurt, with additional searches taking place in Duesseldorf and Berlin.

The prosecutor said the probe related to severe tax evasion, money laundering and obstruction of justice, with the investigation targeting 25 employees of the bank.

Prosecutors have arrest warrants for five of those employees, they said.

About 20 police minibuses and two large coaches were parked outside Deutsche Bank headquarters, where tax inspectors clutching backpacks and suitcases were seen leaving the building.

Eight policemen wearing dark blue overalls armed with handguns were stationed in the lobby.

Deutsche Bank said it was cooperating fully with the authorities.

"Public prosecutors searched Deutsche Bank offices today in connection with investigations that have been underway since the spring of 2010 against individuals suspected of tax evasion in the trading of CO2 emission certificates," Germany's biggest lender said in a statement.

In October, Deutsche had suspended a handful of employees after it was criticised by a judge last year during a trial into tax evasion on carbon permits, a financial source familiar with the matter said.

Last year, a German court sentenced six men to jail for participating in a conspiracy to evade around 300 million euros (241 million pounds) in value-added tax (VAT) on carbon permits between August 2009 and April 2010.

The judge said at the time the way Deutsche Bank conducted emissions trading with some of the convicted men had left the door open for tax evasion.