The Wall St Journal has also reported that German regulators, BaFin, have referred Greensill Bank to criminal prosecutors who may decide on charges being laid relating to “balance sheet irregularities”.
The German bank was bought by Greensill in 2014 and regulators this week suspended the bank’s activities while an audit is carried out.
BaFin said the move was made to secure the bank’s assets.
There are moves by Greensill to wrap up the sale of assets to Apollo Global Management as part of the insolvency.
Greensill’s problems keep coming back to the company’s exposure to Sanjeev Gupta’s GFG Alliance, a company which had been a shareholder in Greensill but also relied on the Australian’s company for financing. Gupta owns the Whyalla steelworks in South Australia and has been a proponent of using renewable energy for “green steel”.
The Financial Times has reported that €2 billion ($3.1 billion) of the €3 billion Greensill loan book was connected to Gupta.
Greensill’s business was supply chain financing, a type of reverse factoring, in which suppliers receive an early payment for goods and allows extra time for repayment. In Greensill’s case, Credit Suisse supplied the financing through bond purchases from Greensill and had a $US10 billion exposure to the company. Credit Suisse was the first to move against the company when it froze that funding over concerns about the exposure to Gupta.
The Bank of England has also entered the fray over the £726 million ($A1.3 billion) in retail deposits held by Gupta’s Wyelands Bank.
Lex Greensill started the company in 2007 and had worked with major banks in supply chain financing after watching his parents struggle with bills from their Bundaberg farm which is still run by the family.
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