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A controversial dispute over compensation payments in the double-digit millions has flared up around the bankruptcy of the Greensill Bank in Bremen.
Because not only around 40 municipalities from the public sector have invested their money with the institute in the hunt for credit interest, but also a 100 percent subsidiary of the federal government, whose name brings back unpleasant memories of the financial crisis more than ten years ago: the Hypo Real Estate Holding GmbH.
According to a list that is available to WELT, the successor company to Hypo Real Estate (HRE), which was forcibly nationalized in 2009, had a credit balance of over 75 million euros at Greensill Bank - exactly 75,244,907.64 euros.
The explosive thing about it: The HRE and the amount invested can be found on a Greensill customer list, which is overwritten with the words "Not eligible for compensation".
The HRE stands there in a row with cities such as Monheim, Eschborn and Wiesbaden, which also parked double-digit amounts at Greensill Bank and are not part of the deposit insurance.
The ten municipalities that have invested the most money in Greensill Bank
Source: WORLD infographic
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In the case of the deposit protection fund, it is assumed that the state subsidiary and thus the taxpayers will be left with the damage caused by the state-mandated closure of the bank.
The Federal Association of German Banks (BdB), which is responsible for the compensation payments, justifies this with the fact that financial institutions are not protected under either the Deposit Protection Act or the Statute of the Deposit Protection Fund.
"When asked, the deposit protection fund cannot confirm that HRE is not a financial institution," said the WELT association in writing.
You see it differently at HRE.
"From the point of view of HRE, the entire invested sum of 75 million euros is fully secured by the deposit protection fund," said the company, which is still based in Munich, when asked by WELT.
That was assured when the time deposits were made between April 2018 and December 2019.
"According to the deposit protection fund's announcement on December 10, 2019, Greensill Bank AG's security limit was EUR 100.099 million at the time," says the HRE's written statement.
At the crucial point in time of the investment, it was above the 75.2 million euros.
It is now just below that.
Is HRE still a financial institution?
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When it comes to the question of the compensation claim, the decisive factor is whether HRE is actually still a financial institution or just an asset management company.
Financial institutions are not compensated, but an asset management company that “acquires, sells or holds financial instruments solely for the purpose of investing its own assets”, as stated in Section 6 (4) of the Statute of the Deposit Protection Fund, will.
The task of the few remaining HRE employees is basically to comply with legal claims from creditors of the old HRE.
According to the 2019 annual financial statements, the company has assets of 1.3 billion euros at its disposal.
This sum will be invested “conservatively”, the company announced, that this will be done “broadly in fixed-income securities with very good credit ratings” and “time deposits that are subject to deposit protection”.
The skirmish between the banking association and HRE is not only due to different interpretations of the legal framework.
Since the state financial supervisory authority BaFin closed the Greensill Bank and declared the compensation case, the mood in the banking camp has been irritable.
There, at least behind closed doors, the supervisory authorities are accused of intervening much too late and not courageously enough at Greensill Bank - which has now led to unnecessarily high damage.
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We are talking about a good three billion euros, about one third of which is accounted for by the statutory deposit protection and two thirds by the BdB's deposit protection fund.
Private institutions such as Deutsche Bank and Commerzbank have to finance the deposit insurance, they ultimately pay for the damage.
If, of all things, a company that has already caused tremendous turbulence in the industry in the past is to benefit from this, one or the other bank manager will certainly be bitterly offended.
Since the BaFin determined the compensation case this week, the law allows seven working days to pass before the money flows from the deposit protection.
The statutory deposit insurance, in turn, as a creditor, has a right to the insolvency estate - and this in a "priority position", so it is more likely to get money back than, for example, the municipalities.
This is because - this is little controversial - since 2017 no longer falls under the protective shield of the deposit insurance.
As things stand so far, around 40 municipalities with a deposit volume of 300 million euros are affected.
Even the state of Thuringia, which has invested 50 million euros, is now doing everything it can to get at least part of the money back.