Share split chaos at many German banks and brokers

Video game retailer Gamestop completed a 1-for-4 stock split on July 22, 2022. Only a few days later, however, the additional Gamestop shares disappeared without a trace from the portfolios of many German investors. However, the value of the original securities fell in the ratio of 1 to 4. A search for clues.

As early as April 2022, there were rumors that video game retailer Gamestop wanted to implement a stock split to make its securities more attractive. About two months later, the listed company announced a similar capital measure.

An official company announcement dated July 6, 2022 says that the American group “has decided and declared a 1:4 split of the company’s Class A stock by way of a stock dividend.”

Accordingly, all shareholders “registered in the share register at the close of business on July 18, 2022” will receive a dividend of an additional three shares for each of their common shares. The company again named July 21, 2022 as the distribution date.

Stock split vs. stock dividend: Chaos surrounding Gamestop shares

On the following trading day, Gamestop shareholders in Germany also received three additional shares for each common share in their securities account. The value of Gamestop shares fell by 75 percent. If you e.g. previously had ten shares at a price of EUR 150, you would then have 40 shares at a price of EUR 37.50.

However, the total value remained the same – in this case at 1,500 euros. In all banks, the capital measure was also referred to as a stock split or stock split. But what followed was probably a rude awakening for many investors in the truest sense of the word.

Gamestop shares disappeared without a trace overnight

Because in the night from July 29 to July 30, the additional shares disappeared without a trace from their depositories. However, the price of the original shares remained split, resulting in a price loss on the bottom line of 75 percent. This is reported by several users in forum posts on Reddit.

The affected shareholders initially received no information from their banks and brokers. According to our research and insider information, customers of Sparkasse, Postbank, Volksbank, Sparda Bank and DKB are among those affected.

The lowest common denominator is that the German securities service bank (dwp-Bank) handles the securities service for all these banks. Dwp-Banken has so far left an inquiry from BASIC thinking unanswered. Meanwhile, it was heard from the outside world in DKB that the bank had no influence on the design of capital measures and was dependent on its data suppliers.

Similar statements also seeped out from savings bank circles. There were therefore different attitudes towards tax implementation. Both banks emphasized that a correction has already been made and that the book entries are carried out correctly and in a timely manner.

BaFin warns custodian banks to implement correctly

Due to numerous tips from investors, the Financial Supervisory Authority BaFin has meanwhile felt compelled to issue a statement. Accordingly, the authority warned the custodian banks to “ensure the delivery of the new shares.”

On the technical level, the corporate action was also handled by the data suppliers as a share split and not as a share dividend. However, the individual providers changed the nature of the measures to share dividends on 29 July, only to reverse this on 1 August.

According to BaFin, this may necessitate a technical recalculation for some banks and brokers. However, this should happen in the coming days. The reason for the back and forth is tax reasons. The financial database WM Datenservice had changed its assessment.

In Germany, the corporate action at Gamestop ultimately takes place as a tax-neutral stock split and not as a stock dividend, which is sometimes taxable.

Also interesting:

Leave a Comment