The auditing firm Ebner Stolz has given details of why it withdrew its auditor's report for the 2019 annual financial statements of Greensill Bank.

The insolvency of Bremer Greensill Bank in March shook the German financial market.

Many municipalities lost money invested with the bank, while private savers had to be compensated at the expense of the banking association's deposit protection fund.

The Greensill bankruptcy resulted in criticism of the financial supervisory authority BaFin and the responsible auditing company Ebner Stolz.

When the auditors revoked their attestation for the Greensill annual financial statements for the 2019 financial year in April 2021, this signal came too late for the bank customers affected by the insolvency.

Mark Fehr

Editor in business.

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As can now be seen from a publication in the Federal Gazette dated August 16, the Greensill Bank is said to have withheld important contracts and agreements from its auditors.

"As a result, Ebner Stolz revoked the attestation in accordance with the applicable professional law and issued a refusal note," said a spokesman for Ebner Stolz when asked by the FAZ.

What is it about in detail?

According to the presentation in the Federal Gazette, the Greensill Bank's balance sheet shows claims on customers from supply chain financing in the amount of 2.2 billion euros, which as of December 31, 2019 accounted for around 58 percent of total assets and more than four times its own funds.

Unresolved contradictions

In view of these proportions, this is a balance sheet item that is decisive for assessing the company's situation. According to Ebner Stolz, contracts for the supply chain finance business with a sister company of Greensill Bank were presented during the audit. In February 2021, the auditors are said to have learned that further contracts for supply chain financing had already been concluded in 2019, but they had been withheld from them. Only on request did Greensill Bank provide the auditors with the contracts that had been withheld up to that point on February 16, 2021. At the same time, Ebner Stolz received additional clarifying agreements between Greensill Bank and its sister company,which should not have been closed until January and February 2021.

Apparently, the subsequently submitted documents led to a different assessment of the supply chain financing. According to the presentation in the Federal Gazette, the agreements concluded subsequently between Greensill Bank and its sister company reflect a different understanding than the wording of the contracts concluded in 2019. The company's legal representatives could not have clarified these inconsistencies with the auditor. Therefore, Ebner Stolz no longer sees himself in a position to assess whether the accounting for supply chain financing in the 2019 annual financial statements was correct.

Supply chain finance was central to Greensill Bank. It supplied the steel company Liberty Steel with liquidity and obtained the necessary money from German municipalities and savers, among other things, which allowed the balance sheet total to rise sharply in a short period of time. Because the steel industry suffered particularly badly from the Corona crisis, Greensill Bank's business also collapsed.