Banks - Portigon liable for cum-ex debts
A dispute worth billions between two successors of the defunct Landesbank WestLB has been settled. One of them, the state-owned company Portigon, had attempted to pass on debts from WestLB's cum-ex transactions to the other successor, the "bad bank" Erste Abwicklungsanstalt (EAA). After Portigon failed with this plan before the Frankfurt Higher Regional Court at the end of 2022, the Federal Court of Justice has now put its foot down. An appeal has been rejected, the BGH announced on Tuesday. The decision was made on December 5.
This means that the OLG ruling in favor of the EAA is legally binding and Portigon is liable for tax debts of around one billion euros. Portigon is owned by the state of NRW, while the two NRW savings bank associations each hold a 25% stake in the EAA and the state of NRW holds around 48%.
"This decision by the Federal Court of Justice has averted the greatest single risk for the EAA," said Managing Board member Christian Doppstadt, expressing his satisfaction. After around four years of litigation, it is now clear that Portigon is liable for WestLB's cum-ex tax liabilities.
A spokesman for the NRW Ministry of Finance said that the BGH ruling would not have any impact on the state budget. "The legally binding outcome of the legal dispute is already reflected in the companies' balance sheets and planning."
WestLB was involved in cum-ex transactions between 2005 and 2008. The share deals around the dividend record date were aimed at obtaining multiple refunds of capital gains tax from the tax authorities that were not paid. Numerous German banks are involved in the tax scandal.
WestLB got into difficulties in the course of the 2008/2009 financial crisis. It was broken up in 2012 under pressure from the EU Commission. The bad bank, to which portfolio shares had already been transferred in 2009, took over further risk positions and strategically unnecessary divisions during the restructuring completed in 2012. The EAA and Portigon argued about whether the tax liabilities for the cum-ex transactions were also taken over when the "capital market business" division was transferred. This was not precisely regulated in the contract.
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Source: www.stern.de
