Cum-ex trial against Olearius fuels ownership question
The Cum-ex scandal could also shake up the ownership structure of Warburg Bank. Since September 18th former Warburg Bank CEO and shareholder Christian Olearius will face trial at the Bonn Regional Court. Together, Olearius and Max Warburg own approximately 80% of the bank's shares. The trial will examine allegations of severe tax evasion in 14 cases. In Cum-ex schemes, investors sought refunds of capital gains taxes on dividends that were never paid.
Role of BaFin
The proceedings also raise the question of the entry of a new external investor as the financial watchdog BaFin is assessing Olearius's suitability as a co-owner of the bank through an ownership control procedure and could revoke his suitability. "In such a process, specifically with a bank, there is always the risk that BaFin could question the organizational and ownership structures," affirms Henning Schneider, a partner at the law firm Latham & Watkins, to Börsen-Zeitung. "In similar situations, it was advisable to consider what options exist early on to find a good solution for all parties involved and to ensure the company's permanent presence at the location," Schneider added.
Private equity firms are reluctant
Hamburg-based lawyer Schneider is interested in a continuation of a "Hamburg solution," meaning the independent continuation of Warburg Bank in Hamburg. "This wonderful bank, with a long tradition and international reputation, must be preserved for Hamburg and Germany with all its might," he says. A few years ago, when the shipping company Hapag-Lloyd was at risk of falling into the hands of a new owner from Singapore, Schneider helped bring together a consortium of German investors. One of the key figures was the entrepreneur Klaus-Michael Kühne, in addition to the city of Hamburg. Kühne, an 86-year-old billionaire residing in Switzerland, now holds a stake in Hapag-Lloyd along with his Kühne Nagel Group. The problem is that Kühne prefers investments in logistics, as that is his area of expertise.
Likewise, potential financial investors for Warburg Bank, such as private equity firm Apollo, which already owns OLB, are showing reluctance. Hauck & Aufhäuser, a banking subsidiary of the Chinese Fosun Group, acquired Bankhaus Lampe in 2020. However, the value of Warburg Bank in the current situation is difficult to assess. Is it worth 200 million euros, or perhaps closer to 400 million euros? It all depends, in part, on how much the number of affluent private clients shrinks during the trial against Olearius.
Will Warburg Bank remain in family ownership?
The Cum-ex trial against the now-insolvent Maple Bank ended in the autumn of 2022 with lengthy prison sentences for former Germany CEO Wolfgang Schuck and other bankers. The manager of the bank's securities lending division has just apologized in court, stating that he relied on tax opinions. The author of these opinions, Ulf Johannemann, who also faces charges, was the head of the tax department at Freshfields.
Meanwhile, the newly formed Warburg Bank board is confident that the bank, which has been under BaFin's scrutiny because of Cum-ex for years, will remain a Hamburg-based private bank in family ownership. "I am confident about that," says Chief Market Officer Stephan Schrameier, who has been leading the bank since 2022 alongside Markus Bolder, in an interview with Börsen-Zeitung. The 225-year history, he believes, demonstrates the bank's ability to constantly reinvent itself. This is part of its "DNA."
Regarding speculations about a Hamburg consortium, the involvement of wealthy families, or a merger, the board refrains from commenting. "The board is not involved in discussions about the future ownership structure of the bank and possible changes." Olearius, a long-time spokesperson for the partners until 2014 and chairman of the supervisory board until the end of 2019, and the Max Warburg family each hold 40% of the shares.
Warburg Bank is "fully operational"
Reportedly, Olearius, whose shares are managed by a trustee at the request of the regulator, has no intention of divesting his stake. Whether the proceedings against the 81-year-old will have consequences for his ownership is unclear. The owner-control procedure has not yet concluded, and the approval for the merger of the Warburg Group holding company into the bank is contingent on it.
For the moment, Warburg Bank's board emphasizes that the bank is "fully operational." At the same time, there is some headwind that they cannot avoid. "The fact that the bank is repeatedly mentioned in the coverage of the political and legal processing of the Cum-ex issue, despite having settled tax claims and implemented personnel changes in the composition of the bank's bodies, harms our reputation."
Stephan Schrameier, Warburg Bank
We don't need to offer a Warburg discount to attract new customers.
No discount for new customers
Schrameier acknowledges that the bank would like to attract more new customers. "But we don't compromise on terms because of the Cum-ex issue," he adds. "We don't need to offer a Warburg discount to attract new customers." With regard to the numerous changes in bank leadership, Schrameier emphasizes that the current board is "committed to ensuring continuity."