(Bloomberg) -- The Austrian financial regulator stepped in to shut down European American Investment Bank AG after finding anti-money laundering shortfalls and credit losses at the lender with ties to Adler Group SA’s former chairman.
Austria’s Financial Market Authority banned Euram Bank from conducting business with immediate effect, according to a statement published Wednesday.
The measure will likely trigger €38 million ($41.4 million) in payments from Austria’s deposit insurance plan, which typically reimburses client deposits up to €100,000, the insurer said in a separate statement.
The Vienna-based lender failed to raise at least €25 million in fresh capital as previously ordered by the watchdog, or come up with a plausible wind-down plan, the FMA said. The regulator intervened due to “serious deficiencies” in money-laundering prevention, and “enormous” loan write-down needs.
Euram had €649 million of total assets at the end of 2022, according to its most recent available audited accounts. Since its founding in 1999, it has offered private banking services for wealthy individuals and family offices, including in Russian language.
The bank had faced continued scrutiny from regulators in recent months. The FMA moved to halt new business in January, a decree the bank challenged in court, and appointed a temporary administrator in August.
Shareholders of Euram Bank’s holding company include former chairman of German landlord Adler Peter Maser, as well as Nematollah Farrokhnia, according to the minutes of a June 2023 meeting. Farrokhnia is a former executive of construction company Strabag SE, whose son founded the now-insolvent property developer Imfarr Beteiligungs GmbH.
Austria’s deposit insurance organization said it guaranteed €38 million out of a total of €277 million deposits held at Euram, with around 757 customers estimated to be compensated.
Funds needed for the payments are already available, ESA said in the statement, indicating that other Austrian banks wouldn’t need to make contributions. The deposit insurer expects to recoup the funds over the course of the bank’s wind-down.
(Updates with statement from Austrian deposit insurer from third paragraph.)
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