As was to be expected, the Bundesanstalt für Finanzdienstleistungsaufischt (BaFin) – Germany’s Federal Financial Supervisory Authority – has determined that compensation is payable to Greensill Bank’s depositors, as the bank is no longer able to repay all of its customers’ deposits. Insolvency proceedings have also been initiated against the bank with the Amtsgericht Bremen, the District Court of Bremen (508 IN 6/21).
After ordering a moratorium on Greensill Bank and freezing the accounts, it was to be expected that the BaFin would file a bankruptcy petition for the bank and determine that compensation is payable to the bank’s depositors. This has since come to pass.
The bank’s private customers can now breathe a sigh of relief, since their deposits are protected up to a value of 100,000 euros under the German Deposit Guarantee Act (Einlagensicherungsgesetz, EinSiG). With the BaFin having determined that compensation is payable, payments can now be arranged to this end. We at the commercial law firm MTR Rechtsanwälte can report that there is also the possibility of additional payments under the deposit protection fund (Einlagensicherungsfonds) of the Association of German Banks (Bundesverband Deutscher Banken).
Yet by no means are all customers in the clear, as not all of them are protected under the terms of the Deposit Guarantee Act. The funds at risk include the deposits of public bodies such as municipalities, as well as the deposits of insurance and reinsurance companies and pension funds.
They now have until May 14, 2021 to register their claims in due form and time in the insolvency schedule. While it is currently not possible to estimate how large the insolvency dividend will be, the creditors should expect significant financial losses. Moreover, the insolvency proceedings may drag on for a number of years.
Customers of Greensill Bank whose deposits are not protected under the Deposit Guarantee Act or who come up against difficulties receiving compensation pay-outs can take further legal action to prevent financial losses.
One option is to have someone look into the possibility of asserting claims for damages. Parties against whom these potential claims may be asserted include the auditors who issued Greensill Bank its audit certificate, or individuals in positions of responsibility at the bank. It should be noted here that the BaFin’s investigations revealed accounting irregularities and the bank was unable to provide evidence indicating receivables on the balance sheet. The BaFin has filed criminal charges with the Bremen public prosecutor’s office.
Lawyers with experience in the field of banking law can advise customers of Greensill Bank who have been affected.
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