The bankruptcy of Greensill Bank was almost three years ago and is still casting its shadow. The local authorities that invested in the bank without deposit protection have reassessed the situation after a period of standstill and are now moving to sell their receivables at a discount. This is a painful step, but nevertheless the right one.

Since the insolvency proceedings, with a probable rate of 30%, will continue for many years, the sale of receivables is the better option overall. On the one hand, inflation with its compound interest effect erodes the value of a payout in ten years. On the other hand, money flowing back can now be reinvested, where fixed-term deposits can earn up to 3.5%. This raises the resulting „insolvency ratio“ to around 30% if municipalities such as Wiesbaden and Giessen receive the current prices for their assets.

A bird in the hand is worth two in the bush. However, another aspect is also fundamental for the municipalities: the local politicians responsible for bad investments are being teased by their local rivals and are facing the anger of the citizens. Only if a line can be drawn under the Greensill debacle will it be possible to look to the future.

This will be easier for a wealthy municipality like Eschborn, which has 30 million euros on the line, than for Giessen, which only emerged from the state's protective shield procedure in 2020 after seven years. The state of Hesse had taken over 78 million euros of the old debt – and then this happened.

The local authorities have now tightened their investment guidelines. Money is parked with savings banks and cooperative banks. However, the banks should save themselves the gloating that is sometimes expressed towards Greensill-damaged treasurers. After all, the investments were made under the negative interest rate regime, which called for alternative movements. Transactions that took place when the imbalance was already public remain incomprehensible, though.