The collapse of Greensill, whose founder received a state honour from Britain in 2018 for his services to the economy, could lead to a series of regulatory investigations and cause financing problems for its higher-risk borrowers.
Greensill said it had provided more than $US143 billion of financing in 2019 to 10 million customers and suppliers.
In Germany, where Greensill runs a bank, financial regulator BaFin has filed a criminal complaint with prosecutors in Bremen, where the lender is based. The precise details of the complaint are not known.
BaFin also suspended Greensill Bank’s operations saying there was an imminent risk it could become bankrupt. The German bank kept Greenshill Capital’s short-term loans on its balance sheet before they were securitised and sold to Credit Suisse.
Several German municipalities have flagged that they have put millions of euros into Greensill Bank, attracted by its lack of negative interest rates, and some are calling on the federal government to cover any losses.
BaFin said 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 has not responded to requests for comment on BaFin’s findings.
In Britain, meanwhile, the financial regulator has taken action against GFG’s own trade finance arm Wyelands Bank.
The Bank of England’s Prudential Regulation Authority said it had ordered Wyelands to repay all its depositors, without specifying why. GFG has declined to comment on the matter.