Varengold hits out at “grossly misleading media coverage” amid compliance probe
Varengold has blasted media coverage of the German regulator’s investigation into the bank and defended its Iran-linked business activities.
Earlier this month, it emerged that the German Federal Financial Supervisory Authority (BaFin) is investigating Varengold’s payment transaction business in its commercial banking division, due to possible compliance violations.
On Tuesday (22 June), Varengold revealed that the regulator’s audit pertains to payments connected to Iran, which it said provoked increased enquiries from media as well as shareholders.
“Various media are currently reporting on the so-called ‘Iran business’, whereby the role of Varengold Bank in the entire complex is being represented in a partially inaccurate and misleading manner,” the Hamburg-based bank said today.
Varengold, which has funding agreements with a number of European peer-to-peer lending platforms, said that it only supports Iran-linked transactions in the humanitarian field.
“The expansion of this area goes back to a business decision taken many years ago to support people who do not have access to banking services due to difficult regulatory conditions, political motives or other restrictions,” it said. “In this context, the bank also supported exporters in the processing of payments for urgently needed food and medical technology to Iranian importers.”
The bank said these transactions are permitted and have been carried out properly from the beginning.
Varengold also defended its liquidity position, after it emerged last week that it cancelled its dividend payment for 2022 to protect its capital base.
The bank said it has “a long-term and sufficient liquidity position” and explained how its balance sheet meant it could cope with a flurry of redemptions.
“Varengold Bank’s balance sheet total is made up of about 60 per cent daily available account balances of corporate customers in an account at the Deutsche Bundesbank, about eight per cent equity and provisions, and about 32 per cent call and fixed-term deposits of German savers,” it said. “These German savers are matched by an identical volume of loans. This means that the balance sheet structure of Varengold Bank itself would be able to cope with the simultaneous withdrawal of all deposits in the call money accounts by customers.”
Varengold has more than halved its full-year profit guidance, is cutting 22 per cent of its workforce and halting certain projects to cut costs in the wake of the regulator’s audit.
The regulator has imposed further reporting requirements on the bank, relating to liquidity, financials and capital reserves.
