FRANKFURT (Reuters) - German city Osnabrueck fears it will lose 14 million euros ($17 million) invested with Greensill Bank after the country’s financial regulator warned this week of “an imminent risk” to the lender. Osnabrueck is the third German municipal authority to disclose this week that it faced possible losses from the bank based in Bremen and a local finance official demanded the German government step in. “I call on the federal government to assume these losses incurred by the municipalities,” the official, Thomas Fillep, said in a statement. A Greensill Capital spokesman declined to comment on Osnabrueck and similar investors with Greensill Bank, or the amount of unsecured funds the lender holds. German regulator BaFin warned on Wednesday of the risk that Greensill Bank would become over-indebted and imposed a moratorium on it making disposals or payments. BaFin’s move was another blow to the bank’s owner, Greensill Capital, which said on Tuesday it was in talks to sell large parts of its business after losing the backing of two Swiss asset managers. Founded by Lex Greensill, a former Citigroup and Morgan Stanley banker, Greensill Capital is the largest non-bank provider of supply chain finance. It says its technology-driven approach provided $143 billion of financing in 2019 across 10 million customers and suppliers. Germany’s deposit protection scheme protects individuals but not institutional investors. Greensill Bank has about 500 million euros in unsecured funds, such as those from Osnabrueck and other towns, a person familiar with the matter said. Like the German towns of Monheim am Rhein and Bad Duerrheim that have announced similar concerns about Greensill Bank, Osnabrueck was attracted to the lender because it helped them avoid paying negative interest rates on deposits elsewhere. Osnabrueck, which has a population of 170,000, opted for Greensill Bank because its very good credit rating meant the city could assume it was a very safe investment, local official Fillep said. He criticised BaFin for not informing towns when concerns about the bank emerged last year, saying Osnabrueck would have scaled back its involvement if it had been aware. BaFin said in a statement that it acted decisively in 2020 on Greensill Bank, taking various enforcement actions including the installation of a special monitor. However, BaFin said informing the public would have broken confidentiality laws. Germany’s finance ministry declined to comment. German credit ratings agency Scope did not immediately respond to requests for comment. Parliament’s finance committee has put the Greensill Bank case on the agenda of a meeting later this month. Osnabrueck began investing in time deposits with Greensill Bank last year and currently has nearly 14 million euros with maturities of between April 2021 and March 2022. Its most recent investment was 11.5 million euros in November. Osnabrueck tried to withdraw the funds after a credit downgrade but was unable to, the city said. ($1 = 0.8382 euros)