FRANKFURT (Reuters) – The Auditing Association of German Banks registered complaints about Greensill Bank with Germany’s financial watchdog BaFin in early 2020, a spokesman told Reuters on Thursday.
BaFin warned on Wednesday of “an imminent risk” that Greensill Bank would become over-indebted as it imposed a moratorium on the lender making disposals or payments.
Oliver Santen, spokesman for the auditing association, which oversees the deposit insurance scheme for Germany’s private banks, said Greensill Bank had not followed rules underpinning the scheme.
“This applies in particular to the expansion of business volume pursued by the institution,” Santen said, adding that the auditors took immediate action.
“It was the auditing association that alerted BaFin to Greensill Bank’s problems as early as the beginning of 2020.”
A spokesman for Greensill declined to comment. A BaFin spokesman was not immediately able to comment.
BaFin’s move was another blow to Bremen-based Greensill Bank’s owner, Greensill Capital, which said on Tuesday it is in talks to sell large parts of its business after the loss of backing from two Swiss asset managers which underpinned key parts of its supply chain financing model.
Founded by Lex Greensill, a former Citigroup and Morgan Stanley banker and adviser to the British government, Greensill is the largest non-bank provider of supply chain finance.
It says its technology-driven approach has provided $143 billion of financing in 2019 across 10 million customers and suppliers.
Greensill helps companies spread out the time they have to pay their bills. The loans, which typically have maturities of up to 90 days, are securitized and sold to investors, allowing Greensill to make new loans.
BaFin said on Wednesday that an audit found that Greensill Bank could not provide evidence of receivables on its balance sheet purchased from mining tycoon Sanjeev Gupta’s GFG Alliance.
GFG did not respond on Wednesday to a request for comment on BaFin’s findings.
(Reporting by Patricia Uhlig and Tom Bergin; Writing by Tom Sims; Editing by Alexander Smith)
