The money house is located in the Bonifazius towers in Mainz.
(Photo: Thomas Kohler)
Frankfurt, Dusseldorf The financial regulator Bafin closes the North Channel Bank in Mainz. BaFin announced on Thursday that the authority had imposed a moratorium on the institute due to the threat of over-indebtedness. This means that the bank can no longer do business with customers and no longer make payments.
The bank is comparatively small. At the end of November, according to Bafin, it only had a balance sheet total of 123.5 million euros. “Their plight therefore poses no threat to financial stability.”
The deposits of the approximately 500 remaining depositors of North Channel Bank are protected by the deposit insurance of the German private banks. According to financial circles, the deal is in the mid double-digit million range.
As soon as the Bafin formally determines the compensation case, the deposit protection fund of the Association of German Banks wants to contact the protected depositors without being asked to compensate them.
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North Channel Bank was involved in so-called cum-ex transactions in Europe. Banks and investors were reimbursed for taxes that they had not paid at all. In connection with these transactions, Danish and Belgian tax authorities are currently making claims for damages of 176 million euros against North Channel Bank, Bafin said.
“An amicable solution, which was negotiated to the end between the bank and the tax authorities and with which a settlement payment of a significantly lower extent was sought, could not be achieved,” said the financial supervisory authority.
Since North Channel Bank is not in a position to pay the damages claimed, measures to ensure liquidity and limit risk are required.
A sale of the bank failed at the end of 2022
“The bank is chronically in deficit and no longer has a sustainable business model,” emphasized Bafin. According to its own statements, it already restricted the granting of loans and the acceptance of deposits at the institute in August 2021.
The management of North Channel Bank stated that a sale of the institute at the end of the year had failed, as had further negotiations regarding a voluntary liquidation.
Parallel to the imposition of the moratorium by the Bafin, the management of North Channel Bank “created an insolvency notice with a similar reason and supports a planned insolvency procedure”.
While North Channel Bank itself did not engage in any allegedly illegal dealings at the expense of Danish and Belgian taxpayers, it did help launder the profits derived from these acts. The bank is said to have known where the money transferred to their accounts came from.
The string pullers are said to have been businessmen from the USA who had bought into the North Channel Bank. The Koblenz public prosecutor’s office investigated the then responsible German managing directors of the bank on suspicion of money laundering. In the meantime, the two men were even in custody.
However, by decision of November 22, 2022, the Koblenz Regional Court did not allow the charges against the ex-managing directors and five other suspects. However, the decision is not final because the public prosecutor’s office took action against it.
More: Prosecutors fail with charges against former North Channel Bank bosses