In what could become a test case for defining the limits of personal liability in corporate Germany, a Munich bank, HypoVereinsbank, may move to recover nearly €140 million ($151 million) from three ex-managers for their role in what was later deemed to be an illegal tax-refund investment scheme.
The strategy used at HypoVereinsbank, a unit of Italy’s UniCredit bank, was profitable, and not unusual at the time in Germany. Scores of other banks employed similar dividend-stripping investments over a decade to generate tax rebates and high returns for their clients and themselves.
But the investment’s underlying structure was later ruled to be illegal by the German government. Since then, the state has been pursuing the banks to recoup billions in lost revenue. HVB has had to return €140 million so far and pay an additional €9.8 million fine.
Now, HVB is taking the next step. It is considering recouping money from its former senior executives who were responsible at the time for the dividend-stripping. The three – a former chief financial officer, a former head of investment banking and head of private banking – could face repayment demands in the triple-digit millions of euros.