Now Greensill Bank faces a criminal lawsuit in Germany

Now Greensill Bank faces a criminal lawsuit in Germany: Regulator accuses directors of manipulating finances

The crisis engulfing Greensill Capital and steel magnate Sanjeev Gupta intensified last night.

Greensill Bank, the lender’s German division, is facing a criminal lawsuit after the country’s regulator BaFin filed a complaint with prosecutors accusing directors of manipulating its finances.

At the same time, the Bank of England ordered a bank owned by Gupta to repay deposits to its savings account customers.

Greensill Bank is facing a criminal lawsuit after Germany’s regulator BaFin filed a complaint with prosecutors accusing directors of manipulating its finances 

The moves by German and British regulators came amid mounting scrutiny on Gupta’s finances and Greensill, which counts former prime minister David Cameron as an adviser and is on the brink of filing for insolvency in the UK.

Gupta’s business empire, GFG Alliance – a group of loosely connected companies which includes vast swathes of the UK’s remaining steel industry – has relied heavily on Greensill for loans. 

But Greensill was plunged into crisis this week when a number of major backers walked away. Addressing the prospect of criminal complaints last night, it said it had complied with a request from BaFin earlier this year to change the way some assets were classified.

A spokesman added: ‘Greensill Bank has at all times been transparent with its regulators and auditors about its approach to classifying assets and the methodologies for determining such classifications.’

But the concerns spell a dramatic fall from grace for 44-year-old founder Lex Greensill, who grew up on a modest Australian farm and became a billionaire on paper as he built up the supply chain lender. 

Through his networking, he has fostered relationships with several influential figures – including Cameron and Gupta, who was the ‘saviour of UK steel’ after a spending spree that saw him buy up plants in Rotherham, Stocksbridge in South Yorkshire, Newport and Hartlepool.

In Britain, Gupta’s group employs around 3,000 at its steel plants and another 2,000 work in its engineering businesses. 

He also owns Wyelands Bank, which is based in Mayfair and is understood to have lent money to other groups in the tycoon’s empire.

In an unprecedented move, regulators at the Bank of England ordered Wyelands to repay deposits to all its savings account customers.

Gupta announced yesterday that he had supplied Wyelands with a £75million cash injection, so it could pay back savers.

He added that Wyelands would be pursuing a new strategy ‘following conversations with regulators’, but did not go into further detail.

The bank is understood to have around 4,000 savers with deposits of around £210million – down from more than 15,000 depositors with £726million in 2019. It stopped taking deposits last year.

A spokesman for the Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA), said it had been ‘engaging closely with Wyelands Bank’ and ‘required it to operationalise an orderly repayment of its deposits’.