Shattered Kingdoms

Beckmann exclaims 'Halt, lawbreajfr!'
Beckmann says 'I will now carry out your sentence.'
Beckmann says 'For the murder of Morgun: amputation of a limb and minor confiscation of personal property.'
Beckmann raises his weapon and then severs your arm!
Your left arm has been severed!
Beckmann confiscates something or other.
Beckmann frowns.
Beckmann says 'You're too poor to pay full restitution, so you'll get some extra cell time.'
Beckmann says 'Your prison sentence is 0 days and 3 hours.'
Beckmann escorts you off to your new prison cell.

2.9 obsidian on me, 20+ in the bank. What exactly does he want for restitution, a full bank account?

He didn't want coin. I think he wanted lewt.

He took lewt too.

It seems like NPCs take a random piece of eq, then they value it and if it doesn't fit the price tag for the crime, then it goes up.
Very random, from my observations at least.

It is not a bug, though I personally find it extremely annoying. The sentence was confiscation of equipment, it didn't involve a fine. Therefor it would not have mattered how much coin you had on you or in the bank.

Did you check the bank afterwards? Did he take any?

It's sort of funny at times. I can surrender with a suit of lvl 45+ adamantite armor in my inventory, coin on me, and coin in the bank. And the guards will take three pieces of armor, frown, and give me ONE hour in jail. It makes me laugh.

I see no bug here. As others have said, property fines are completely separate from cash fines. It doesn't matter how much or where your money is when you are being fined one or more pieces of equipment.

Minor confiscation of personal property is one item.
Major confiscation of personal property is three items.

In both cases, the items chosen will be what the guard thinks is your best item, not randomly. Then, if the value of the item(s) does not equal or exceed a certain amount, you still end up with jail time based on how inferior the equipment was compared to your status.