Keep an eye on this Greensill Bank situation. It may be the loose yarn that unravels the whole global financial sweater. From Tyler Durden at zerohedge.com:
Germany’s Bafin has frozen accounts at Greensill’s Gremany-based bank as its parent company’s debt-repackaging business has tumbled into administration. And unfortunately, the demise of the bank will likely take tens of millions of euros of public money that had been invested in short-term high-interest accounts.
Millions of dollars belonging to German municipalities had reportedly been parked at the Bremen, Germany-based bank. And because towns and cities aren’t protected by a German deposit-protection scheme that shields assets belonging to individuals, town managers and elected officials fear they won’t be able to recover the taxpayer money, adding to the financial strain as the world struggles to recover from the COVID-19 pandemic.
Germany’s economy is still in a partial COVID-19-inspired lockdown. After losing out on countless tax revenue, towns may be forced to do without deposits parked at Greensill Bank, which apparently had been recommended to dozens of Germany towns by a pair of brokerages that help municipalities park their cash.
One town, Monheim on Rhein, parked €38M with Greensill Bank.
Monheim am Rhein disclosed it parked 38 million euros in funds with Greensill Bank, nearly 1,000 euros per resident.
Its mayor Daniel Zimmermann said he was in touch with 19 municipalities who together hold 200 million euros ($238 million) in investments with the bank.
An emergency meeting in Monheim on Tuesday discussed the fallout, and whether internal mistakes were made or whether brokers who helped make the investments should bear some of the blame.
“We don’t want to shun responsibility, but others may be at fault,” Zimmermann told Reuters.
Zimmermann said that two of the brokers it used — CC Gesellschaft für Geld- und Devisenhandel mbH and Witt GmbH & Co. KG — were also used by other towns.
