WestLB’s successor Portigon may shift up to 500 million euros from Cum-Ex tax debts to the savings banks in North Rhine-Westphalia.
(Photo: dpa)
Frankfurt, Düsseldorf In the dispute between the two WestLB successor companies, Portigon and Erste Abwicklungsanstalt (EAA), there is a loser: EAA, the bad bank of the former WestLB. She has to take over tax debts in the amount of one billion euros from Portigon. The Frankfurt Regional Court decided on Wednesday morning (AZ: 2-27 O 328/2).
Portigon had sued the EAA to take over the tax reclaims from illegal cum-ex deals. Since the North Rhine-Westphalian savings banks are involved in the EAA, part of the additional burdens will apply to them. Put simply, cum-ex deals are about illegal tax refunds from stock deals.
The judges of the 27th Civil Chamber justified the decision as follows: “Although the tax liabilities in question were not expressly assigned to the defendant in the course of the winding-up of WestLB.” the defendant, i.e. by the EAA, was intended.
But the dispute continues. The EAA announced on Wednesday that it intends to appeal the judgment.
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The background to the billions dispute is that Portigon has to reckon with enormous back taxes due to cum-ex deals of the Düsseldorf-based WestLB. The possible tax reclaims amount to more than 500 million euros. Because it is partly about years ago, there is also enormous interest.
While the first impression suggests that one state bank is blaming the other, a look at the ownership structure shows what is behind the lawsuit. Portigon is completely owned by the state of North Rhine-Westphalia. The two North Rhine-Westphalian savings bank associations together hold 50 percent of the shares in the EAA, the other half is held by the state. NRW and the local savings banks were also the owners of the lost WestLB, once the largest Landesbank.
From the court’s point of view, there was no alternative to the destruction of Portigon
WestLB had accumulated enormous losses during the financial crisis and was broken up in 2012. Portigon was essentially founded to shoulder the pension burdens of the former WestLB employees. The EAA is to reduce the securities and loan portfolio of the collapsed Landesbank. It is now disputed whether it was explicitly or implicitly agreed in the contracts when the EAA was created that the EAA would also assume the tax liabilities of the former WestLB.
When the Handelsblatt first reported on a data carrier in 2015 on which WestLB’s cum-ex transactions were documented, those affected denied being involved in the scandal. Six months later, the public prosecutor came to the house. After a further three years of investigations, Portigon announced that it had to set up provisions of a good half a billion euros – because of WestLB’s cum-ex deals.
The judges said on Wednesday: “Although those involved were aware that there were known and unknown tax liabilities, they did not evaluate and regulate all tax risks.” According to the general regulation in the contract, EAA should therefore assume risk positions “if they were to be assigned to a company area not required for strategy ”. This applies to the capital market business, where in turn the cum-ex deals were made.
Savings banks do not have to shoulder 500 million euros immediately
The court assumes that the EAA would probably have assumed the tax risks even if the cum-ex transactions had been discussed when the bad bank had been set up. Because there was “no alternative” to the smashing of WestLB. WestLB had speculated in the wake of the financial crisis, had to be saved with state money and was then split up under pressure from the EU’s competition watchdog.
According to a court ruling, Erste Abwicklungsanstalt (EAA) has to pay tax debts from cum-ex deals of the former WestLB.
(Photo: dpa)
The savings banks do not now have to be responsible for half of the tax liabilities – around 500 million euros. The EAA’s equity amounted to almost 690 million euros at the end of June 2021. The EAA could initially access this.
The North Rhine-Westphalian savings banks also have to pay for part of the EAA’s future losses and therefore save a total of around 4.5 billion euros by 2035. The savings banks are likely to have put almost half of them aside.
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