Canada’s Superintendent of Financial Institutions has taken temporary control of the assets from the Canadian branch of Maple Bank GmbH, which is headquartered in Germany.
“The Superintendent took this action to preserve the need for the assets held in the branch considering the choice of the German prudential regulator to close the financial institution for business with customers,” the Office of the Superintendent of monetary Institutions said inside a statement.
Last weekend, authorities in Germany shut down Maple Bank’s business activities there regarding the an investigation into alleged tax fraud.
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On Monday, National Bank of Canada disclosed it will take a jot down of $165 million, addressing the full carrying worth of its 24.9 percent equity interest in Maple Financial Group, the Canadian-based parent company of Maple Bank.
Maple Financial is a privately owned, and has offices in Toronto, Frankfurt, Jersey City, The Hague, and London, according to a company website.
Frankfurt-based subsidiary Maple Bank keeps a foreign bank branch in Toronto that’s supervised by OSFI.
Superintendent Jeremy Rudin said OSFI’s mandate drove the choice to take control of the assets on Wednesday.
“We are guided by our mandate, which would be to protect the depositors and creditors from the Canadian branch and have taken this task to safeguard their interests,” he said in a statement.
According to the company website, the primary businesses from the Toronto Branch of Maple Bank include securities finance and structured secured wholesale lending.
“In addition, the Toronto Branch brings the treasury strength of Maple Bank to another Maple Financial businesses in The united states,” the web site says.
The investigation in Germany is reportedly focusing on dividend payments. Based on media reports, Maple Bank’s Frankfurt offices were raided in September in connection with the investigation.
The investigation involves “selected trading activities by Maple Bank, and some of their current and former employees” throughout the 2006 to 2010 tax years, according to National Bank, which says neither its operations nor its employees are subjects of the probe.
Both National Bank and also the Ontario Teachers’ Pension Plan, another minority investor in Maple Financial Group, have indicated they’ll repay portions of the dividends they received if the allegations in Germany have been proven.
Maple Group had its origins at Canadian brokerage First Marathon where it was operated as the Financial Products Group.
Some of Maple Group’s current operating divisions are regulated by Canada’s Investment Industry Regulatory Organization of Canada.
In a statement late Wednesday, IIROC released a statement saying the regulator “has experienced constant communication with Maple Securities Canada Limited and Maple Futures Corp. and it has taken the required regulatory actions to preserve the firms’ capital in Canada.”
IIROC has also been coordinating along with other regulatory authorities and clearing agencies in Canada.
“We continue to closely oversee the capital and liquidity of the firms because they reduce their business activities,” the statement said, adding that “IIROC works with both firms as their management assesses their options and determines their next steps.”
Financial Post
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