German Bank Fails

Unclear if this is a mismanaged company or a sign that the global economy is not as strong as widely assumed.

Last week: German watchdog puts Greensill Bank on hold due to risk concerns

Germany’s financial watchdog warned of “an imminent risk” that Greensill Bank would become over-indebted on Wednesday as it imposed a moratorium on the lender making disposals or payments.

BaFin’s move is another blow to the 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.

Greensill, which was founded in 2011 by former Citigroup banker Lex 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.

Greensill’s primary source of funding came to an abrupt halt this week when Credit Suisse and asset manager GAM Holdings AG suspended redemptions from funds which held most of their around $10 billion in assets in Greensill notes, over concerns about being able to accurately value them.

Bloomberg: Greensill Files for U.K. Insolvency After Swift Unraveling

Greensill Capital filed for administration in the U.K., capping a stunning collapse for the supply-chain finance company after key backers walked away over concerns about the valuation of its assets.

...Greensill remains in talks with Apollo-backed Athene Holding Ltd. on the sale of its operating business, though any transaction will likely be at a fraction of the $7 billion valuation that the company had sought in fundraising talks last year when it was considering plans to go public. Athene is offering about $60 million for Greensill’s IT and intellectual property, the court documents showed.

Greensill unraveled in a matter of days once the lack of confidence began to sweep across the financial world. At the heart of the trouble are loans made by its supply-chain finance business. Greensill backers from Credit Suisse to Softbank Group Corp. and GAM Holding Corp. signaled doubts about the debt, upending the multi-billion-dollar empire. It also emerged that Softbank’s Vision fund had substantially written down its $1.5 billion holding in Greensill late last year.