26 German cities with losses of EUR 255 million are joining forces to win back funds in the insolvency proceedings of Greensill Bank, a city that coordinates the efforts mentioned yesterday. A German court has opened insolvency proceedings for Greensill Bank, which is owned by British Greensill Capital and for which former British Prime Minister David Cameron acted as an advisor.
The obscure Bremen lender was this month by the German financial regulator BaFin with Blocked warning that the risk is imminent that his debts are no longer manageable. The regulator also questioned some of the bank’s financial accounts.
A number of German cities that had deposits with Bremer Greensill Bank feared they would lose the money. The municipal holdings of institutional investors are excluded from a deposit guarantee system for the protection of the individual.
Monheim am Rhein, one of the most affected municipalities, announced the initiative coordinated by it.
« The representatives of the cities signed on We agreed on a coordinated legal approach on Monday and are preparing a joint representation of their interests, « said Monheim in a statement.
German cities have turned to alternative investments such as those offered by Greensill Bank, as the efforts of the European Central Bank propping up the economy as a whole, leading to negative interest rates, and charging fees for savings.
Many of the cities said they chose Greensill to avoid these fees and were encouraged by what was once healthy credit ratings.
Bafin filed an application with a court in Bremen on Monday to initiate insolvency proceedings for the bank conduct.
« We received an application from BaFin yesterday (Monday) evening to open insolvency proceedings against Greensill Bank AG, » said a spokeswoman for the local court.
The owner of the bank, Greensill Capital, went last Week into bankruptcy after losing insurance cover for the repackaging business.
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