why does the bank ask if a director has previously gone bankrupt

Part of customer due diligence, not of a risk model

The bank asks this as part of the mandatory customer due diligence under the Act on the Prevention of Money Laundering and Financing of Terrorism (Wwft). A previous insolvency of a director says something about integrity risk, one of the standard items that every bank reviews for every business customer. It is not a separate credit question and is separate from the credit assessment of the enterprise itself — that is a different part of the file, see also Does the company have a current credit rating?.

The question almost always concerns the director as a natural person, not the enterprise that is now requesting or maintaining the account. If none of the current directors have ever personally been in insolvency, then the answer is "no" and there is nothing further to provide. If that is the case, the bank usually wants to know when that was, which enterprise it concerned and how it was settled — a curator's report or a court ruling is then the standard supporting document. This subject often touches on the same question round as Who are the ultimate beneficial owners of the company?, because banks often review directors and UBOs at the same time.

Traceable to customer due diligence under the Wwft

The obligation for this type of due diligence follows from the Act on the Prevention of Money Laundering and Financing of Terrorism, which requires banks and other institutions to know their customer, including the persons who manage the enterprise. The Act itself does not literally mention "insolvency" as a question, but the open standard of customer due diligence gives banks the scope to include this type of integrity question in their own format. This also explains why one bank asks about it and another does not, or why the question is formulated differently than with an insurer — compare why does the bank ask completely different questions than the insurer when it is about the same thing.