FRANKFURT (Reuters) – The German city of Osnabrueck is concerned about losing the 14 million euros ($ 17 million) it invested with Greensill Bank after the country’s financial regulator warned this week of “imminent risks” for lenders.

Osnabrueck is Germany’s third municipal authority to disclose this week that it faces possible losses from a Bremen-based bank and a local finance official has asked the German government to step in.

“I ask the federal government to bear the damages incurred by the city government,” said the official, Thomas Fillep, in a statement.

A Greensill Capital spokesman declined to comment on Osnabrueck and investors similar to Greensill Bank, or the amount of unsecured funds held by lenders.

German regulator BaFin warned on Wednesday about the risk that Greensill Bank would become over-indebted and imposed a moratorium on any divestments or payments.

BaFin’s move was another blow to bank owner Greensill Capital, who said on Tuesday it was in talks to sell most of its business after losing support from two Swiss asset managers.

Founded by Lex Greensill, a former Citigroup and Morgan Stanley banker, Greensill Capital is the largest provider of non-bank supply chain finance. He said his technology-based approach provided $ 143 billion in financing in 2019 across 10 million customers and suppliers.

German deposit protection schemes protect individuals but do not protect institutional investors. Greensill Bank has about 500 million euros in unsecured funds, such as those from Osnabrueck and other cities, said someone with knowledge of the matter.

Like the cities of Monheim am Rhein and Bad Duerrheim in Germany which have announced similar concerns about Greensill Bank, Osnabrueck is attracted to lenders because it helps them avoid paying negative interest rates on deposits elsewhere.

Osnabrueck, which has a population of 170,000, chose Greensill Bank because its excellent credit rating means the city can consider it a very safe investment, said local Fillep officials.

He criticized BaFin for not notifying cities when concerns about the bank surfaced last year, saying Osnabrueck would reduce his involvement if he became aware.

BaFin said in a statement that it was acting firmly in 2020 at Greensill Bank, taking various enforcement actions including the installation of special monitors. However, BaFin said informing the public would violate confidentiality laws.

The German finance ministry declined to comment. Germany’s credit rating agency Scope did not immediately respond to a request for comment.

The parliamentary finance committee has put the Greensill Bank case on the agenda for a meeting later this month.

Osnabrueck began investing in time deposits with Greensill Bank last year and currently has nearly 14 million euros with maturities between April 2021 and March 2022. His most recent investment was 11.5 million euros in November.

Osnabrueck tried to withdraw funds after the credit downgrade but was unable to do so, the city government said.

($ 1 = 0.8382 euros)

FRANKFURT (Reuters) – The German city of Osnabrueck is concerned about losing the 14 million euros ($ 17 million) it invested with Greensill Bank after the country’s financial regulator warned this week of “imminent risks” for lenders.

Osnabrueck is Germany’s third municipal authority to disclose this week that it faces possible losses from a Bremen-based bank and a local finance official has asked the German government to step in.

“I ask the federal government to bear the damages incurred by the city government,” said the official, Thomas Fillep, in a statement.

A Greensill Capital spokesman declined to comment on Osnabrueck and investors similar to Greensill Bank, or the amount of unsecured funds held by lenders.

German regulator BaFin warned on Wednesday about the risk that Greensill Bank would become over-indebted and imposed a moratorium on any divestments or payments.

BaFin’s move was another blow to bank owner Greensill Capital, who said on Tuesday it was in talks to sell most of its business after losing support from two Swiss asset managers.

Founded by Lex Greensill, a former Citigroup and Morgan Stanley banker, Greensill Capital is the largest provider of non-bank supply chain finance. He said his technology-based approach provided $ 143 billion in financing in 2019 across 10 million customers and suppliers.

German deposit protection schemes protect individuals but do not protect institutional investors. Greensill Bank has about 500 million euros in unsecured funds, such as those from Osnabrueck and other cities, said someone with knowledge of the matter.

Like the cities of Monheim am Rhein and Bad Duerrheim in Germany which have announced similar concerns about Greensill Bank, Osnabrueck is attracted to lenders because it helps them avoid paying negative interest rates on deposits elsewhere.

Osnabrueck, which has a population of 170,000, chose Greensill Bank because its excellent credit rating means the city can consider it a very safe investment, said local Fillep officials.

He criticized BaFin for not notifying cities when concerns about the bank surfaced last year, saying Osnabrueck would reduce his involvement if he became aware.

BaFin said in a statement that it was acting firmly in 2020 at Greensill Bank, taking various enforcement actions including the installation of special monitors. However, BaFin said informing the public would violate confidentiality laws.

The German finance ministry declined to comment. Germany’s credit rating agency Scope did not immediately respond to a request for comment.

The parliamentary finance committee has put the Greensill Bank case on the agenda for a meeting later this month.

Osnabrueck began investing in time deposits with Greensill Bank last year and currently has nearly 14 million euros with maturities between April 2021 and March 2022. His most recent investment was 11.5 million euros in November.

Osnabrueck tried to withdraw funds after the credit downgrade but was unable to do so, the city government said.

($ 1 = 0.8382 euros)