OSFI seizes control of assets of the Canadian branch of Maple Bank

Canada’s Superintendent of Financial Institutions has taken temporary charge 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 decision from the German prudential regulator to shut the bank for business with customers,” the Office from the Superintendent of Financial Institutions said inside a statement.

Last weekend,  authorities in Germany shut down Maple Bank’s business activities there in connection with an investigation into alleged tax fraud.

Related

National Bank of Canada writes down investment in Maple Bank

On Monday, National Bank of Canada disclosed it will take a jot down of $165 million, addressing the full carrying value of its 24.9 per cent equity interest in Maple Financial Group, the Canadian-based parent company of Maple Bank.

Maple Financial is a privately held, and has offices in Toronto, Frankfurt, Jersey City, The Hague, and London, based on a business website.

Frankfurt-based subsidiary Maple Bank maintains a foreign bank branch in Toronto that’s supervised by OSFI.

Superintendent Jeremy Rudin said OSFI’s mandate drove the decision to take control of the assets on Wednesday. 

“We are guided by our mandate, which is to protect the depositors and creditors of the Canadian branch and have taken this step to guard their interests,” he explained in a statement.

According towards the company website, the main businesses of 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 North America,” the web site says.

The investigation in Germany is reportedly focusing on dividend payments. According to media reports, Maple Bank’s Frankfurt offices were raided in September regarding the the investigation.

The investigation involves “selected trading activities by Maple Bank, plus 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 workers are subjects of the probe.

Both National Bank and the Ontario Teachers’ Pension Plan, another minority investor in Maple Financial Group, have indicated they will repay servings 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 has taken the necessary regulatory actions to preserve the firms’ capital in Canada.”

IIROC has additionally been coordinating with other regulatory authorities and clearing agencies in Canada.

“We continue to closely oversee the capital and liquidity of the firms as they reduce their business activities,” the statement said, adding that “IIROC will work with both firms his or her management assesses their options and determines their next steps.”

Financial Post

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