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German Regulator Close to Freezing Greensill Bank Payments

Bloomberg logoBloomberg 3/3/2021 Steven Arons and Nicholas Comfort

(Bloomberg) -- German financial regulator BaFin is close to freezing payments in and out of Greensill Bank AG, a step that could further weaken the stricken trade-finance empire amid efforts to find a buyer.

The watchdog could take the decision on a so-called moratorium for the German banking arm of Greensill Capital at short notice, according to people familiar with the matter, who asked not to be named because the deliberations are private.

The move is one of the strictest actions the regulator can take, designed to preserve what’s left of a lender after a period of stress to ensure that depositors and creditors get as much of their money back as possible. It’s another headache for founder Lex Greensill, who is in talks to sell the firm’s operating business to Athene Holding Ltd amid a crisis of confidence in the creditworthiness of its borrowers.

Read More: Greensill Nears Sale to Apollo-Backed Athene as Funds Freeze

BaFin has appointed a special representative to oversee day-to-day operations of Greensill Bank. Spokespeople for BaFin and Greensill declined to comment.

The regulator has already spent months probing Greensill Bank’s exposure to companies linked to U.K. industrialist Sanjeev Gupta. Bloomberg reported in August that BaFin was considering imposing caps on exposure to Gupta or additional capital demands for the banking unit.

Balance Sheet Leap © Bloomberg Balance Sheet Leap

Gupta has since made headlines in Germany after his Liberty Steel Group sought to buy Thyssenkrupp AG’s steel business, although talks ended last month after the parties couldn’t agree on a price.

Deal talks are progressing between Greensill and the combination of Athene and Apollo Global Management Inc., according to people familiar with the matter. Athene is a Bermuda-based annuity seller that’s part-owned by Apollo.

Greensill Spotted His Weakness Before Jet Flight: Chris Bryant

Greensill has entered a “period of exclusivity with a leading global financial institution with a view to concluding a transaction with them this week,” the firm said in a statement Tuesday. Any deal is expected to include “large parts of Greensill’s business and its assets under management,” the company said.

Bafin’s appointment of a representative in theory gives it the ability to intervene deeply in the bank’s running if it sees the need.

Greensill Bank is a member of the deposit protection fund run by the Association of German Banks, a lobby group. That means its depositors are afforded protection beyond the legal minimum of 100,000 euros.

The German deposit marketplace Raisin GmbH said Wednesday it would not broker any new funds to Greensill Bank for the time being. The Berlin-based fintech had previously funneled “several hundred million euros” to Greensill Bank, a spokeswoman said.

BaFin’s stance on Greensill contrasts with its handling of the Wirecard AG scandal, where the watchdog was slow to respond to allegations of wrongdoing. That electronic payments company, which collapsed in June, also relied on a German banking unit to fuel its growth.

(Recasts from first paragraph)

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