(Bloomberg) -- German financial regulator BaFin is freezing payments in and out of Greensill Bank AG, a further step that weakens the stricken trade-finance empire of Lex Greensill amid efforts to find a buyer.
The watchdog said on Wednesday it imposed a so-called moratorium on the German banking arm of Greensill Capital, according to a statement. Bloomberg had reported earlier that the regulator was moving closer to taking the decision. Germany's financial regulator has also asked prosecutors in the city of Bremen to investigate Greensill Bank AG.
The move is one of the strictest actions the regulator can take, designed to preserve what's left of a lender after a period of stress to ensure that depositors and creditors get as much of their money back as possible. It's another headache for Greensill, who is in talks to sell the firm's operating business to Athene Holding Ltd amid a crisis of confidence in the creditworthiness of its borrowers.
There is an “imminent risk” that the bank will become over-indebted, according to the regulator's statement. BaFin has ordered the bank be closed for business with customers and prohibited it from accepting payments that are not intended for repaying debt to Greensill Bank AG
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