A sizeable price of $2.9 billion has been paid by German banks as compensation for depositors as a unit of the Maple Financial Group closes its doors.
The bank was closed by a supervisor earlier this year following disputes over tax issues. Watchdog Bafin shut Maple Bank as issues surrounding tax issues were said to threaten its stability. Even though the German branch of the bank is smaller than the bulk of lenders in the country, the compensation pay out to depositors was actually the first to be implemented since an amendment to rules last year which are meant to help taxpayers avoid taking on costs when banks fail.
According to a report in Bloomberg
, the bulk of the funds are expected to be retrieved from the bank’s insolvency administrator. Typically around 90 per cent is retrieved.
The new compensation mechanism was brought in on July 1 last year. It means that payments must be made within seven working days.
The move comes after Maple Bank had asked the bankruptcy court in the US for protection. However, German authorities wish to hold the bank liable for alleged tax liabilities reported to be in the region of 392 million euros.