Greensill Bank has collapsed against the lenders by the German government!

 

Hypo Real Estate, one of Germany's largest casualties during the financial crisis in 2008, has lost 75 million euros in the collapse of the Greensill Bank. buy property in qatar for expats

HRE was one of the depositors attracted by Greensill Bank's relatively high interest rates whose parent, Greensill Capital, collapsed in March.

The German government was forced to take over the Munich based institution and was, according to people familiar with the matter, one of the main depositors at the bank, following the allocation of the funds in 2018.

BaFin shut down Greensill bank in March, following alleged balance sheet manipulations revealed by a forensic audit. The regulator subsequently lodged a criminal complaint against the management of the bank, which is currently under public prosecutors investigation in Bremen.

Losses to Greensill's retail customers are compensated by the German Deposit Insurance System, which has paid them over €2.8 billion. However, the initiative does not cover public sector agencies and banks.

HRE said the insurance policy, provided by the country's banks and operated by the German Bank Association, refused to pay the banks for the insurance, saying that it was a financial entity and therefore not insured.

HRE was one of Europe's largest lenders of commercial real estate until its government bailout in 2008. After a major liquidity crunch at their Irish subsidiary, it was nationalized, costing German taxpayers € 21 billion.

In 2015, the best sections of HRE were finally called Deutsche Pfandbriefbank, which is a member of the German Banks Association. HRE is no longer running undertakings but now is a state-supported body that seeks to recover unpaid claims from the lender and to reduce losses for German taxpayers.

Due to its position, HRE does not claim that it is a financial institution and is qualified for insurance.

'From HRE's point of view, €75 million total deposits are entirely insured by the deposit insurance scheme,' said HRE, adding that this was 'compensation expected.'

"This is a completely odd situation," one guy, who was familiar with the topic, said.

Greensill Bank's collapse has reverberated across Germany. To avoid negative interest rates, hundreds of municipalities have jointly deposited up to €500 million in the bank. Many take civil action against the lender.

The cost of a collapse of the Greensill Bank will be borne by Germany's private banking sector because it will have to plug the void in the deposit scheme. The Deutsche Bank said last month that it anticipated contributing at least €240 million by 2024, with approximately €70 million due this year.

Greensill Capital, a supply chain finance firm that used some of its financing from its German subsidiary, failed in March after insurers declined to extend cover.

The German Banks Association refused to comment.

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