Loss of half a billion ?: Municipalities fear greensill deposits

Sunday March 14th 2021

Half a billion loss?
Municipalities fear greensill deposits

The financial regulator Bafin has stopped the Greensill Bank's customer traffic due to the threat of bankruptcy. While savers are legally protected, around 50 German municipalities are threatened with a loss of their deposits – totaling half a billion euros.

Because of the closure of the Greensill Bank in Bremen by the financial supervisory authority, around 50 German municipalities could lose a total of half a billion euros. That reported the "Welt am Sonntag" with reference to industry circles. The portal tagesgeldvergleich.net, which recommends systems itself, has already published an initial list of affected municipalities. Until Sunday, 27 municipalities were listed in addition to the state of Thuringia, which had invested a total of 303.2 million euros in Greensill.

Thuringia could therefore lose 50 million euros, the city of Monheim am Rhein 38 million euros and Eschborn in Hesse 35 million euros. The Federal Financial Supervisory Authority (Bafin) ordered a moratorium on Greensill Bank at the beginning of March and closed the bank to customers. The financial supervisory authority justified this step with a "threatened over-indebtedness" of the bank.

Greensill Bank is a German offshoot of the British financial institution of the same name. The institute is dependent on Greensill Capital, which has slipped into bankruptcy. Over the past few years, the company has raised billions in money from savers through its bank subsidiary in Bremen, with which transactions in supply chain financing have been secured. While deposits from savers up to 100,000 euros are covered by the statutory deposit insurance, this has not been the case for deposits from municipalities for a number of years.

"One should expect that the cities are aware of the risk," said Tobias Hentze, an expert on tax and financial policy at the Cologne Institute for Economic Research (IW) of the newspaper. It is also not the task of a municipality to build up capital.