After the closure of the Greensill Bank in Bremen by the financial supervisory authority BaFin, German municipalities are under pressure.
While private savers are insured, the municipality of Vaterstetten, for example, is threatened with a loss of millions.
Vaterstetten
- As Mayor Leonhard Spitzauer (CSU) announced on Sunday evening, the municipality of Vaterstetten was also affected by the crisis at Bremer Greensill Bank.
The municipality has invested around 5.5 million euros in various short-term and long-term time deposit accounts at this bank with a German banking license.
Bank was closed on Wednesday
BaFin closed Greensill Bank AG on Wednesday last week.
Turbulence at the British-Australian parent company had put the Bremen subsidiary in trouble.
The moratorium is intended to secure assets.
Due to the threat of over-indebtedness, a sale and payment ban was issued.
At the same time, the supervisory authority filed a criminal complaint against the institute.
Community has 25 million in fixed deposit accounts
As Spitzauer announced, the municipality has the municipal assets (reserves, special reserves, operating funds of the cash desk) totaling around.
25 million euros distributed across various banking institutes in accordance with the recommendations of the Bavarian Municipal Testing Association (BKPV) and different terms selected.
In order to avoid penalty interest (negative interest) or custody fees, private banking institutions were also taken into account in this diversification in accordance with the recommendations of the BKPV.
In this respect, around 20 percent of the municipal facilities were created at Greensill Bank.
Some of the money comes from projects that have not yet been settled.
Business relationship since 2014
According to its own statements, the municipality of Vaterstetten has had a business relationship with the bank since 2014, at that time under its name NordFinanz Bank AG.
Many contracts have already been concluded with the private bank, large sums of money have been deposited and they have been able to retrieve them without any problems.
The business relationship came about through a regional financial broker who counts many municipalities among his customers and who pointed out the good creditworthiness of Geensill Bank when making his recommendation.
Spitzauer: “It is currently not clear whether the Greensill Bank will have to be wound up and the community of Vaterstetten will suffer damage as a result.” As a precautionary measure, the community called on a Munich law firm specializing in banking and capital market law to protect the interests of the community.
This law firm should also take a close look at the work of the regional financial broker, the mayor told the Ebersberger Zeitung.
Spitzauer assumes that the community has 30 to 40 fixed-term deposit accounts at various banks.
Today, Monday, he will get a list from the finance department.
As a precaution, however, they have already acted and terminated accounts at the VW Bank.
He cannot yet say whether there are any further layoffs.
The "shock" came on Tuesday
Spitzauer said he found out about the "shock" last Tuesday.
The town hall immediately contacted the legal supervisory authority in the district office and the municipal auditing association.
On Saturday he, Spitzauer, informed the local council about the predicament.
Banking experts assume that the municipalities that had invested money at Greensill Bank will have to say goodbye to their millions.
As of 2017, institutional investors' cash deposits are no longer covered.
Numerous private investors, on the other hand, are protected by deposit insurance.
