According to a German public radio report, Goldman Sachs had purchased insurance from HSH Nordbank against defaulting credits of another American investment bank, Lehman Brothers.

The HSH Nordbank was reportedly obligated to pay $45 million (30 million euros) in compensation directly following the Lehman collapse in September 2008.

Goldman Sachs, however, failed to demand the payment in time, waiting until November - some three weeks after the deadline had gone by.

Reputation on the line

The HSH Nordbank, which employs over 5,000 people worldwide, was hit hard by the financial crisis. In the aftermath of the Lehman collapse, the struggling bank received a 3 billion euro ($4.4 billion) cash injection from the German government.

Speculation abounds surrounding the bank's motives in making the payment last November, a move that experts have called a "$45 million gift."

For its part, Nordbank contends it made the transaction in November out of fear for its reputation. "Had that payment not been made, it could have had done severe damage to our reputation and made refinancing very difficult. These risks had to be avoided," bank spokesman Rune Hoffmann said.

The HSH Nordbank has refused to comment on who authorized the non-obligatory payment. The board of directors said that in a breach of tradition, it wasn't informed about the decision until after the transaction had been made.

glb/dpa/Reuters
Editor: Jennifer Abramson