(Adds Maple Bank comments)
FRANKFURT Feb 7 German financial watchdog Bafin
on Sunday closed the German operations of Canada's Maple
Financial on impending financial over-indebtedness related to
tax evasion investigations.
In September, German prosecutors searched offices and
residences linked to Maple Bank in a probe of serious tax
evasion and money laundering connected to so called dividend
The trades involve buying a stock just before losing rights
to a dividend, then selling it, taking advantage of a now-closed
legal loophole that allowed both buyer and seller to reclaim
capital gains tax.
Bafin said in a statement that once Maple Bank made some
necessary tax provisions, over-indebtedness loomed.
Maple Bank said in a separate statement that the requested
tax provisions are connected to the ongoing investigations into
dividend stripping trades carried out between in 2006 to 2010.
A Maple Bank spokeswoman declined to comment on the amount
of the necessary provisions.
German daily Sueddeutsche Zeitung reported on Sunday that
Frankfurt prosecutors allege that Maple Bank and its business
partners have bilked the taxpayer of some 450 million euros.
The bank has an equity capital of just 300 million euros.
Bafin said in a statement that the lender with 5 billion
euros ($5.58 billion) in assets posed no threat to the financial
stability of the country.
Despite its small size, Maple Bank shot to fame in Germany
in 2008, when the lender helped Porsche in its
takeover attempt of Volkswagen, which eventually led
to the acquisition of the sports car maker by Europe's leading
Maple Bank specialises in equities and derivatives trading
and as of Feb. 4 had 2.6 billion euros in liabilities mainly
with institutional clients.
Bafin said it has barred Maple Bank from continuing its
business to safeguard its assets.
While deposits of up to 100,000 euros are safeguarded by
Germany's deposits protection scheme, up to 60 million euros per
client will be covered by Germany's banking association's
guarantee fund if Bafin declares the bank an indemnification
case, a spokesman for the bank lobby group said on Sunday.
Maple Bank is owned among others by the National Bank of
Canada and the Ontario Teachers' Pension Plan.
($1 = 0.8961 euros)
(Reporting by Arno Schuetze and Alexander Hübner; Editing by
Caroline Copley and Sandra Maler)