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 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.
BaFin’s oversight of banks and financial markets in Europe’s largest economy has come under intense political and media scrutiny after it failed to act on allegations of accounting fraud at payments company Wirecard before its collapse.
Its president Felix Hufeld is leaving as a result of BaFin’s handling of the Wirecard scandal.
“Once again, BaFin appears to have reacted too late to tips,” said Danyal Bayaz, a member of the German parliament.
BaFin said in a statement that it “acted decisively” in 2020 on Greensill Bank.
The bank auditor review revealed a concentration of risk “but no indications of fraud or other criminal acts,” BaFin said.
BaFin said that in the first half of last year it initiated a forensic audit, and took various enforcement actions including the installation of a special monitor.