The bankruptcy of the Bremer private bank Greensill cost some municipalities in the Free State millions - which they will hardly get back.
It is the result of a fatal decision made in 2017.
Munich / Pöcking - The Lappersdorf market was lucky. At the beginning of April, 100,260 euros were received in the account of the municipality in the Regensburg district - money from the assets of the private bank Greensill, which had to file for bankruptcy at the beginning of March. Lappersdorf had already invested the money - 100,000 euros - with Greensill in 2016. At that time there was still a deposit protection fund that now protects Lappersdorf from total loss. There was 260 euros in interest on top. After all, not a loss that, in contrast to Lappersdorf, around 50 municipalities in Germany have to complain about.
How much money they had invested in Greensill is not known - up to 500 million euros, it is said.
This also includes the 5.5 million euros that Vaterstetten (Ebersberg district) can probably write off.
And the two million from Puchheim (Fürstenfeldbruck district).
And the five million that Pöcking (Starnberg district) parked in five tranches at Greensill.
A fatal decision
The money is probably gone, even if Pöckings Mayor Rainer Schnitzler says: "Hope dies last." The reason for the probable total loss is a decision of a very unknown body from 2017. At that time, the Association of German Banks decided that from October 1st 2017 Municipalities and their companies, such as municipal utilities or foundations, no longer have a right to deposit protection. The two funds set up for this purpose only apply to private customers. In fact, the vast majority of private Greensill investors, over 20,000, have already been compensated with a total of 2.7 billion euros. But not the municipalities.
Pöcking's mayor, Rainer Schnitzler, considers this decision to be “not in order” in retrospect. At the time, the banking association argued that municipalities were financial market professionals and could assess the risks of financial investments themselves. A mistake, as you can see now. The German Association of Cities protested against this step at the time - but unsuccessfully. In the case of the municipalities, this is now attributed to a lack of support. “We didn't hear anything about federal politics at the time - nothing at all,” the city council now says. The question arises as to why neither the Federal Financial Supervisory Authority (Bafin) nor the Federal Ministry of Finance intervened against the decision.
17 municipalities, including Puchheim and Pöcking, want to pull together under the leadership of the city of Monheim (North Rhine-Westphalia - 38 million euros loss) and try to get the money back together.
A law firm is tasked with saving what can be saved.
The creditors' meeting will meet for the first time on June 8th in Bremen - after that we will see more, they say.
Now the rule is: security before returns
As a lesson from the bank failure, the municipalities are now switching to zero risk. Motto: "Security before returns". One can only advise all municipalities to draw up investment guidelines and only invest them in private banks with a very good rating, according to the Bavarian Municipal Day. But even a smart treasurer cannot keep an eye on the solvency of the banks on a daily basis. The early warning Swiss financial experts, who warned against Greensill in 2019, probably did not reach all town halls.
The city council in Puchheim has now decided to park money only with public banks - savings banks and cooperative banks. There, the audit committee is supposed to deal with the affair. It seems impossible that treasurers or mayors are liable - for that they would have to have acted with gross negligence according to the Civil Service Status Act. Pöcking is now also investing defensively. One is forced to accept negative interest rates. “You can watch the money melt away,” says Mayor Schnitzler.