Canada Banking Regulator Seizes Assets of Domestic Maple Bank Branch

Canada's top banking regulator on Wednesday said it had temporarily taken control of the assets of Maple Bank GmbH's Canadian branch, just days after Germany's financial watchdog effectively closed Maple Bank.

The Office of the Superintendent of Financial Institutions, or OSFI, said the move was aimed at protecting depositors and creditors of Frankfurt-based Maple Bank's Canadian operations.

Maple Financial Group Inc. is the Canadian parent of Maple Bank, which is under investigation by German prosecutors over alleged tax irregularities. The focus of the prosecutors' probe, first disclosed in September 2015, is potential irregularities for the tax years from 2006 to 2010.

"We are guided by our mandate, which is to protect the depositors and creditors of the Canadian branch and have taken this step to safeguard their interests," Jeremy Rudin, superintendent of financial institutions, said in a news release.

OSFI didn't disclose the value of the assets affected, but said Maple Bank's Toronto branch has "a small number of wholesale deposits." Maple Bank isn't a member of the Canada Deposit Insurance Corp., which means deposits aren't eligible for Canadian government protection in the event of a default.

Maple Financial is partly owned by Montreal-based National Bank of Canada, which has a 24.9% stake. On Sunday, the Canadian lender warned its regulatory-capital level would take a hit after BaFin, Germany's financial watchdog, effectively shuttered Maple Bank. That's because National Bank planned to take a full reserve of its investment.

Maple Bank has operated as a foreign bank branch ‎in Canada since 2001. Its Canadian activities include securitization, securities finance and structured secured wholesale lending, OSFI said.

Canada's banking industry is dominated by the country's five big domestic lenders. Although foreign bank branches operate in the country, they hold a relatively small share of the market.

Write to Rita Trichur at [e-mail]

(END) Dow Jones Newswires

February 10, 2016 14:35 ET (19:35 GMT)

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