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German towns look to recover Greensill Bank cash
Twenty six German towns facing €255m in losses are combining forces as they seek to recover funds in the insolvency proceedings of Greensill Bank, a town coordinating the effort said yesterday. A German court has opened insolvency proceedings for Greensill Bank, owned by Britain's Greensill Capital at which former UK prime minister David Cameron was an adviser.
The obscure Bremen-based lender was locked down by German financial regulator BaFin this month with a warning that there was an imminent risk that its debt would become unmanageable. The regulator also questioned some of the bank's financial accounts.
That left a number of German towns that had deposits with Bremen-based Greensill Bank fearful they would lose the funds. The municipal holdings of institutional investors are excluded from a deposit guarantee scheme that protects individuals.
Monheim am Rhein, which is one of the hardest-hit communities, announced the initiative it has been coordinating.
"The representatives of towns agreed on Monday on a coordinated legal approach and are preparing a joint representation of their interests," Monheim said in a statement.
German towns have turned to alternative investments such as those offered by Greensill Bank as European Central Bank efforts to prop up the wider economy have resulted in negative interest rates, with fees charged for savings.
Many of the towns said they opted for Greensill to avoid those fees and were encouraged by its once healthy credit rating.
The insolvency manager for Greensill Capital declined to comment.
Bafin submitted a filing to a court in Bremen on Monday to start insolvency proceedings for the bank.
“We received an application from BaFin yesterday (Monday) evening to open insolvency proceedings regarding Greensill Bank AG,” a spokeswoman for the district court said.
The bank’s owner, Greensill Capital, entered insolvency last week after losing insurance coverage for its debt repackaging business.
Reuters
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