LCH.Clearnet has liquidated the positions and collateral of the German arm of Maple Bank a day after declaring the lender had defaulted on its financial obligations.

The clearing house, owned by the London Stock Exchange, declared Frankfurt-based Maple Bank GmbH to be a “defaulter” in a notice posted on its website on Monday.

Maple, whose parent company Maple Financial Group, is part owned by National Bank of Canada and Ontario Teachers’ Pension Plan, is a member of LCH’s clearing service for repurchase agreements, known as repos.

Repos are short term trades in which borrower pledges bonds, often treasury bills, as collateral in exchange for cash.

The default follows a move by Germany’s financial watchdog BaFin to ban Maple's German unit from taking payments that were not being used to pay off debts.

Yesterday LCH.Clearnet, one of the largest clearers of bonds and repos globally, confirmed to Global Investor/ISF that all of the Maple Bank GmbH positions had been resolved and that default was managed within initial margin only.

Transactions from the German lender through Eurex Clearing’s services have also ceased, including its securities lending central counterparty, due to the ban on its German branch.

The unit has $5.6bn (€5bn) in assets, according to Bafin. Its failure does not pose a threat to financial stability, the regulator said.

Clearinghouses such as LCH and Eurex – which sit between two sides of a financial trade - guarantee deals if one side defaults before they are completed.