Consumer advocates and the banking industry are promoting uniform supervision

Bafin

In the future, the financial supervision should monitor the approximately 38,000 financial asset brokers.


(Photo: Reuters)

Berlin Bank associations and consumer advocates tend to have different opinions on regulatory issues. Now they have decided to take an unusual step: In a joint letter to parliamentarians from the government factions, the central association of the German banking industry and the consumer association Bundesverband (vzbv) are calling for a certain legislative process to be pushed ahead.

It is about the planned transfer of supervision of the 38,000 financial asset brokers to the financial supervision Bafin. The cabinet passed the legislative proposal on March 11. The associations are obviously concerned that the transfer of supervision of financial intermediaries to Bafin could be watered down in parliament in the further legislative process. Depending on the federal state, financial intermediaries are currently supervised by trade offices or chambers of industry and commerce (IHK).

Shortly before the parliamentary deliberations on the proposed law began, they wrote: “The concern pursued by the government bill with regard to uniform financial supervision in the sale of financial instruments is of particular importance, particularly in times of crisis.” applicable supervisory law.

In the opinion of the banking associations and consumer protection groups, the previous dual role of the Chamber of Industry and Commerce as a supervisory body and as a representative of the interests of commercial professions questions independent supervision and creates space for conflicts of interest. The level of investor protection should not depend on who the customer is contacting, the associations write.

Vzbv board member Klaus Müller confirmed at the request of the Handelsblatt: “Bundling supervision of financial sales at Bafin has been overdue for years. It is important that compliance with the obligation to behave will in future be checked directly by the Bafin. ”The Corona state of emergency should not lead to important and overdue legislative proposals now being stopped.

Industry resists expensive proposal

The intermediary industry itself has always vehemently opposed the cabinet proposal, which will also entail higher costs. She pointed out that no financial scandals had happened under the previous supervision. So far, the supervision of financial investment brokers and fee brokers in nine federal states has been with the IHK, in the other federal states the trade offices are responsible. Over 80 percent of brokers have a license to broker insurance, the supervision of which is nationwide with the Chamber of Industry and Commerce.

After the Federal Cabinet’s draft was passed, the Union has already indicated that it takes the criticism of the legislative proposal “very seriously”. For the CDU financial expert Carsten Brodesser, the draft goes beyond the coalition agreement. “We now have to prevent the worst in parliamentary proceedings.”

Brodesser outlines possible compromises as follows: If the goal is to have more uniform control, “we could imagine, in coordination with the federal states, to standardize responsibility for, for example, expertise and the supervision of financial investment brokers at the Chamber of Industry and Commerce”. The Bafin’s powers could be strengthened in such a way that it sets uniform standards for supervision by the IHK and monitors them. But the SPD would have to play for that. At least the vzbv and the banking associations have clearly positioned themselves with the letter.

More: Financial investment brokers defend themselves against Bafin supervision.

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“Without a state, it is currently not possible”

Frankfurt After the financial crisis, the rules for banks were tightened significantly. The corona pandemic now shows where the new rules work and where they don’t. Bundesbank board member Joachim Wuermeling is overall satisfied with the result. Nevertheless, he stated in the Handelsblatt interview that the financial institutions alone would be overwhelmed with the sharp rise in credit requirements in the corona crisis. “That is why it is currently not possible without the state as the guarantor.”

As part of a special program of the KfW promotional banks, the institutes grant loans in the corona crisis for which the state is 80, 90 or even 100 percent liable. From Wuermeling’s point of view, this is a good solution, after all, banks should not be able to provide enough loans if they cannot count on repayment. “If the state nevertheless wants to help companies for good reasons, it takes on the risks in the interest of the common good.”

The German banks are doing well in the corona crisis “according to the circumstances,” says Wuermeling. However, he fears that there will be more bankruptcies and loan defaults.

“The credit risks are really our biggest concern.” And they will only be reflected in the bank balance sheets with a delay. “I expect the burdens to increase significantly in the third or fourth quarter.”

Wuermeling rejects the creation of a European bad bank to reduce bad loans, as suggested by the ECB’s banking supervision. “This proposal is basically three years old and was not followed up for good reasons at the time.”

The top ECB bank supervisor Andrea Enria had already asked for a bad bank in 2017 in his old role as head of the banking authority Eba. “The reduction in non-performing loans has since made good progress even without such an institution, thanks in part to the resolute crackdown by the European banking supervisory authority SSM, which Andrea Enria now heads,” said Wuermeling. “That is why I do not believe that the initiative from that time will be taken up again at EU level.”

Read the full interview here:

Mr. Wuermeling, how are German banks doing in the corona crisis?
According to the circumstances, the German banks are still doing well. They currently have capital buffers in the hundreds of billions, with which they can grant loans and also cushion losses from loan losses.

In view of the corona crisis, do banks have to put their goals and strategies to the test?
It is already happening. Due to the corona crisis, all institutes are forced to update their earnings forecast for the current year. Returns are falling and risk provisioning is increasing. And after the height of the crisis, many banks will have to review their strategies. The pressure on banks with business models that were vulnerable before the crisis will continue to increase

How dangerous can bank failures and loan defaults become for the banks?
Credit risks are actually the biggest concern for us. Market and liquidity risks leave their mark immediately, but are likely to remain limited overall. By contrast, the losses caused by loan defaults are reflected in the bank balance sheets with a delay of weeks and months. I expect the burdens to increase significantly in the third or fourth quarter.

Can the next banking crisis develop from the corona crisis?
The German banking system is very resilient today. But this question can only be answered reliably if we have more clarity: about the containment of the epidemic, the economic effects and how well the government countermeasures such as the loans from the KfW development bank or the short-time allowance cushion the negative effects on the economy and how quickly the recession can be overcome. It was important that the state acted quickly and comprehensively. As of today, the expected losses should be manageable for the overall market.

Federal Minister of Finance Olaf Scholz recommended that the institutes “let five be straight” when lending. Are the banks too hesitant?
In my opinion, the banks have shown great willingness so far to ensure that the real economy is supplied with credit. But you cannot bear all the risks of a shutdown of the entire economy. The supervisory authority expects banks to carry out a responsible risk assessment even in times of crisis. If the banks simply opened all the gates when lending, sooner or later this would lead to a crisis in the banks. That would not help anyone.

The state assumes 80, 90 or even 100 percent of the liability for many loans. Right?
Banks should provide the real economy with credit even in times of crisis. But a responsible credit policy also means that banks reject loan applications if they cannot expect the loan to be repaid. If the state nevertheless wants to help companies for good reasons, it assumes the risks in the interest of the common good.

What is your interim conclusion for the banking sector after about two months of corona crisis?
It is now clear that we have learned the right lessons from the 2008 financial crisis by building up capital and liquidity buffers. The larger the buffers are, the longer banks are able to perform their tasks even in difficult times. In this respect, it was right to insist that these buffers be called for. The second good news is that the banking system works under the current circumstances. Consumers and businesses can access banking services even when many branches are closed. However, a single bank or savings bank can only prepare itself to a limited extent against a comprehensive threat to the solvency of a large number of borrowers.

So such crises cannot be overcome without state aid?
The banking system alone cannot cope with an extremely sharp rise in credit demand in the economy. That is why it is currently not possible without the state as the guarantor. We see it that way as a supervisor. If we discuss the lessons of the crisis at a later point in time, it will certainly be discussed.

What could solutions look like?
Instruments have now been developed ad hoc under high time pressure to use government aid quickly and in a targeted manner. Fortunately, in Germany we have established channels through KfW and other promotional banks to provide loans with government guarantees to the real economy relatively quickly via the banking system. In future, the regulatory framework for such measures must be designed in such a way that it can take full effect immediately

What do you think of the top ECB supervisor Andrea Enria’s proposal to set up a European bad bank? This could solve the problem of old bad loans before new bad loans are added in the wake of the corona crisis.
This proposal is essentially three years old and was not followed up at that time for good reasons. The reduction in non-performing loans has since made good progress even without such an institution, also thanks to the resolute crackdown by the European banking regulator SSM, which Andrea Enria now heads. That is why I do not believe that the initiative from that time will be taken up again at EU level.

BdB President Hans-Walter Peters, who has just left office, has demanded that the ECB should reimburse the banks already paid negative interest of 26.5 billion euros so that they can grant more loans in the corona crisis. What do you think of the idea?
There is no need to return negative interest at all. It is not a targeted levy for banks, but a monetary policy measure. Banks have to learn to deal with it.

Mr Peters also suggested that the ECB should buy subordinated bank bonds in order to strengthen the capital of the financial institutions.
In my view, that would also not be appropriate. Central banks in the euro zone are currently only buying senior bonds for risk reasons. In addition, the purchase of subordinated bank bonds from supervised institutions would also represent a conflict of interest for the central bank.

Do you think the banks’ demands for more aid are fundamentally absurd?
The previous easing should give the banks enough scope for more credit and loss absorption. It annoys me when now long-discussed proposals come up with the new coat of “crisis measure” on the table, for example the general recognition of self-developed software as equity. This distracts us all from the real challenge.

Before Corona, banking regulators demanded that banks cut costs and increase profitability. Are these demands still valid in the corona crisis?
If you want to act responsibly in the crisis, you have to set your priorities from now on. It is a top priority for us that bank operations and the cash flow are maintained – even when branches are closed and many bank employees work from home. That worked. And we want to make sure that banks continue to perform their important economic functions and lend without risking their stability. This shifted focus in no way means that all other aspects are now irrelevant in the long run. We will come back to this when the acute crisis has been overcome.

Financial supervision has loosened the rules for financial institutions significantly in the wake of the corona crisis. How long should these facilities apply?
The decisions for the exemptions were not easy for us. They can only serve to overcome the crisis. Nobody should bet that they will last forever. Of course, the banks will have the necessary time to regain their normal state of capital and liquidity. But everyone must be aware that we will pull the reins back after the crisis.

Will there be adjustments to banking supervision after the corona crisis?
One lesson from the crisis is that we still have to use digital technologies to a much greater extent in order to get an easier and faster picture of the situation of the banks. In the corona crisis, we initially spoke to large banks every day about their liquidity in a conference call. In the future, it would make sense to be able to access this data directly from the banks’ systems at any time.

How quickly can this be introduced?
The digital motto “think big, start small” should apply. In countries like Israel, the supervisory authority is already checking the liquidity indicators directly in the databases of the institutes. In Europe, we should first concentrate on simple indicators, where timeliness plays an important role. This would allow us to identify problems earlier, act preventively and thus possibly prevent some damage before it arises.

How do you rate the recommendation of the European Banking Authority (SSM) not to distribute dividends – is this appropriate or is it exaggerated in its overall rate?
It is in the interest of financial stability that banks retain their capital in the current situation in order to cushion risks and to be able to grant loans. In my view, there would have been reasons in one or the other special case to allow distributions. But we need a uniform approach in the euro area.

Does the distribution ban also apply to savings banks and Volksbanks?
It is not a prohibition of dividends – this is not legally possible if the capital requirements are complied with – but a recommendation to postpone distributions until early October. We also expect small and medium-sized banks, which are supervised by BaFin and the Bundesbank, to follow this recommendation. And we are very happy that this happens.

What do you do if an incredibly heavily capitalized Volksbank wants to distribute part of its profits despite your urgent recommendation?
It is understandable that it is not easy for a very well positioned bank to follow this. However, this is a collective precaution by all European banks. Because of the epochal challenge posed by the pandemic for the economy and society throughout the euro area, capital should remain in the financial system for now. No bank should go out there. So far, banking supervision in Germany has mostly succeeded in convincing institutions of the usefulness of such measures

Mr. Wuermeling, thank you very much for the interview.

More: Banking Association President Zielke: “Must review Corona business model”

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The end of the special stage is postponed again

Munich / Frankfurt The completion of the special audit at Wirecard shifts again. “Wirecard AG was recently informed by the auditing firm KPMG that KPMG will present the results of the ongoing special investigation on Monday, April 27, 2020,” the group said on Wednesday evening.

“In the remaining days, incoming data should be processed and taken into account,” is the official reason for the postponement. From an investor’s perspective, it was particularly important: “No evidence was found for the publicly alleged manipulation of the balance sheet,” the group continued.

Specifically, in the four business areas covered by the audit order, third-party partner business, pre-financing of receivables and the activities in India and Singapore, “there have been no substantial findings that would have required correction for the annual financial statements in the 2016, 2017 and 2018 investigation period.”

KPMG has been checking the balance sheets of the payment service provider from Aschheim near Munich since October 2019. This was preceded by a year-long debate on Wirecard’s business practices. For the final report now announced for Monday, Wirecard again promises to make it available on the homepage.

Serious allegations

Numerous serious allegations prompted the special audit. Since January 2019, the British business newspaper Financial Times (FT) has published a series of articles on opaque contracts and dubious partners of the group. Above all, the inconsistencies in the important Asian business raised bad suspicions: Has Wirecard manipulated its balance sheet?

After the pressure had risen for months, Wirecard attempted the exemption in October – and commissioned KPMG’s auditors to carry out a special audit of the balance sheets from 2016 to 2018. Today’s postponement represents the second extension of the audit period.

The group had already presented a partial report of the test results at a late hour on March 12. At that time, however, the auditors only achieved partial information about the accounting methods at Wirecard.

They only brought light into three of the four sub-areas examined. The auditors made initial relief statements on two company acquisitions in India in 2015, on financial irregularities at the Asian headquarters in Singapore and on the area of ​​pre-financing of receivables, also known as “Merchant Cash Advance” (MCA). The group defines MCA as loans to small retailers who use the Wirecard platform for their payment transactions.

“From today’s perspective, these parts of the special investigation did not result in any substantive findings in these investigation areas, which would lead to the need for correction for the annual financial statements in the investigation period 2016, 2017 and 2018”, Wirecard had announced in March.

Problematic third parties

At that time, the auditors did not allow themselves to make any statements regarding the particularly important fourth point: the controversial third-party business – i.e. the question of which parts of Wirecard’s sales were generated with the help of external companies.

In October, the FT had posted clear doubts about cash flows via partners in Dubai and Ireland in a ten-page article. The report was enriched by internal and external documents. The focus was on Wirecard’s partner Al Alam from Dubai. This is a so-called “third party acquirer”, which handles the payment transactions in countries where Wirecard does not have its own licenses.

The essence of the allegations: According to FT, Al Alam should have generated around half of its consolidated earnings before interest, taxes and depreciation in 2016. According to the newspaper, the company from Dubai was responsible for sales of EUR 265 million and an “Ebitda effect” of EUR 173 million, according to internal documents.

According to the FT, the business of 34 key Wirecard customers was processed through Al Alam in 2016. They came from the United States, Europe, the Middle East, Russia and Japan.

As a result, the newspaper said it had tried to contact all of these business partners. Accordingly, 15 of them had never heard of the Al Alam name, six did not answer, five could not be identified, and eight of them had already stopped doing business.

Wirecard boss Markus Braun had always denied all these allegations. Now he should feel confirmed by the statement approved by KPMG that no “evidence of balance sheet manipulation” was found in the third-party business either. The mood in the group is good, reports a Wirecard manager. But KPMG wanted to be very precise.

Time-consuming examination

The special test was carried out with great effort. In the meantime, around 40 auditors rummaged through the balance sheets. These had already been approved by the long-standing group auditor EY, whose care, however, was in doubt. The audit is tricky for KPMG: Society knows that its reputation is now at stake.

Today’s “Day X” was planned for Wednesday, the moment of truth. Management hoped to finally draw a line under the accusations of the past with the publication of the test report. The fact that the publication is now postponed a second time shortly before the end after half a year of the exam shows how high the stakes are – and how far the Dax-Newcomer Wirecard is still far from the standard of other large corporations.

Why the relocation? According to insiders, KPMG also checked incoming numbers from third parties earlier this week. Wirecard now officially justifies the extension. According to groups of companies, the data with a probability bordering on certainty did not contain any greater risk for the balance sheet – nevertheless, they are not irrelevant and must be checked by KPMG.

Apparently, it is not only late-arrival data sets that cause problems. According to insiders, Wirecard is also struggling with KPMG to clarify the wording of the test report. There is relief in the most important – on the balance sheet – points, such as the allegation of so-called roundtripping, the invention of sales. Nevertheless, the auditors had made numerous negative findings, for example regarding compliance and internal processes.

Now the question is how serious the corresponding complaints in the test report were. The KPMG auditors formulated significantly more negative than expected, it is said from corporate circles. The corresponding talks continued.

Change in the supervisory board

Wirecard’s new Chairman of the Supervisory Board, Thomas Eichelmann, oversees the review. According to two people familiar with the matter, there is a change on his committee. The previous supervisory board member Susana Quintana-Plaza is promoted to the operational board of the Portuguese oil and gas group Galp Energia and leaves the Wirecard committee at the request of the Galp owner family.

The successor is apparently already certain: A “very well-known personality” should therefore take the place of Quintana-Plaza and strengthen the competence in the control committee. First, the “Wirtschaftswoche” reported on the possible exit. This should not be related to the special test.

With the coming Monday there is now a new end date for the KPMG audit. However, a third extension of the review period is hardly possible: Wirecard plans to publish its 2019 annual balance sheet on April 30. And the group auditor EY apparently does not want to test this without the final KPMG assessment for the special audit.

The payment processor can no longer afford to make mistakes. The KPMG report is sure to attract the keen attention of investors, analysts and regulators. According to insiders, he is also being studied closely by the financial regulator Bafin.

More: Alleged balance sheet fraud, dubious partner: Wirecard has been at the center of criticism for over a year.

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A woman’s shadow lies over SAP – Morning Briefing

Good morning dear readers,

if Germany can show something with pride in the battle of the big digital corporations, it is SAP from Walldorf, the invention of five ex-IBM forces 48 years ago. So it borders on self-harm that after only six months co-CEO Jennifer Morgan already logged out again. So forget all the great portraits of the first boss in the Dax, delete the hymns of praise of the chairman of the board and co-founder Hasso Plattner. According to our knowledge, the implosion at the top is also the result of an internal power struggle. Co-boss Christian Klein carries out a strong standardization and centralization, the American wanted the subsidiaries more independence to let. Even the PR candle from Walldorf cannot hide the dispute between vanities, according to which clarity and determination are necessary in the Corona period. Aristotle thought that to hide a mistake with a lie was to replace a spot with a hole.

In the beginning it advised Robert Koch Institute refraining from autopsying Covid 19 dead, it is too dangerous. From Basel in Switzerland, where there were fewer concerns, the first results of an examination of 20 coronavirus deaths are now coming. They suffered from high blood pressure and Overweight, but above all there was a serious disturbance of the Microcirculation the lungs – the oxygen exchange no longer worked. The Hamburg medical examiner Klaus Püschel also had 100 virus victims examined, according to a report by NDR, WDR and “Süddeutscher Zeitung”. Similar to Basel is also here none of the dead without previous illnesses been.

New York futurologist Amy Webb speaks this week in the “Handelsblatt Disrupt” podcast.

(Photo: Getty Images)

Has become a trend researcher Amy Webb made a name worldwide. This week the New York professor speaks for Strategic future planning in the podcast “Handelsblatt Disrupt” with my colleague Sebastian Matthes. In the interview, Webb predicts the division of the world into two: in part with the People’s Republic of China and its partners, who used a digital surveillance infrastructure, as well as the rest of the other countries. China is using the crisis to expand the Artificial intelligenceto collect even more data, believes Webb. But data are like Algorithms the weapons of the future. And so it does Futurologist in the end worries “that the global pandemic will trigger an economic-technological war that we have never seen before”.

The days of rest in the Dax group Wirecard are over: Today, the final special report of KPMG’s auditors is to be published – on allegations dubious contracts and partners who have been featured in a Financial Times (FT) series. Bafin boss Felix Hufeld wants to study the work of the auditors carefully: “Payment service providers, like banks, must adhere to a comprehensive set of rules.” Bafin’s own investigations into who is involved strategic sales benefited from Wirecard shares prior to the release of “FT” items have been completed. The investigation by the Munich public prosecutor’s office, which uses the Bafin work, continues. According to our information, the German auditing agency for accounting has meanwhile also an investigation of the Wirecard balance sheet check initiated. So this company will soon be as open as an oyster after consumption.

Series hits like “Tiger King”: Netflix increases the number of paid subscriptions.

(Photo: AFP)

Corona time is Netflix-Time. You follow “social distancing”, stay at home and watch series after series, film after film. There is nothing else to be inferred from the most recent figures, the Streaming primus announced last night. After that, the number of paid subscriptions rose in the first quarter by 15.8 million to almost 183 million – which exceeded both the own forecasts and the expectations of the analysts. Series hits like “Tiger King” around Joe Exotic and its big cat zoo are so well received that Netflix is ​​expecting 7.5 million new customers worldwide this quarter. Since the profit has also doubled at the moment, the share is growing again. The company of Reed Hastings is now worth more than the big rival Disney.

The Germans decided to end the season prematurely Handball player – and selected it THW Kiel according to an elaborated calculation model to master. in the Soccer After the Belgian league, the Dutch league also decided to end the season due to the corona restrictions. And in Scotland there is also an end in sight – that of the European association Uefa, contrary to what was announced, will not be punished with the exclusion of clubs from competitions. New regulations that take the corona virus into account are to be presented tomorrow, Thursday. That day, too German soccer Bundesliga decide that ghost games should continue in May. This is the only way to secure a rate of EUR 230 million from Sky for broadcasting rights – and many clubs first before broke rescue.

And then there’s the world performance artist Marina Abramovicwho first silenced her for years Online campaigns breaks against them. “Can’t you stop doing that?” Asks Abramovic, “don’t you see, that’s the art I’ve been doing for 50 years?” She really isn’t a “satanist” – a suspicion that her opponents have been stirring up since becoming one “Spirit Cooking” dinner loaded. Recently, ongoing anonymous online protests have resulted in Microsoft a work with Abramovic, who promoted digital technologies, removed from the YouTube platform after 24,000 dislikes. She is looking for a positive way out of the matter, says the native Serb, “anxiety is the worst human emotion ”.

I wish you a positive, completely fear-free day. And if it consoles you: in 2020 we will experience art and performances again in the museum.

Greetings to you warmly

Hans-Jürgen Jakobs
Senior editor

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Morning briefing: Alexa

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Hannover Re cancels profit forecast – dividend should remain

Hanover The world’s third largest reinsurer Hannover Re withdraws its 2020 profit target due to the corona pandemic. The expected negative consequences of the crisis cannot yet be assessed due to the great uncertainties, the company listed in the MDax surprisingly announced on Tuesday evening in Hanover.

Management expects increased burdens, especially in capital investments and property and casualty reinsurance. In mid-March, Hannover Re boss Jean-Jacques Henchoz had targeted an annual profit of 1.2 billion euros.

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How the corona crisis affects open-ended real estate funds

Erfurt Claus 2020 has big plans for 2020. The managing director of BNP Paribas REIM in Germany – the real estate investment arm of the French major bank – plans to launch an open real estate fund.

With this, the investment manager, whose real estate expertise in Germany has so far been reserved primarily for wealthy and institutional investors, also wants to enter the market for retail funds.

Or rather: wanted. According to the original plan, the fund should start selling at the beginning of April. But then Corona came and everything for Thomas’ plans was different than expected. “We have now postponed the start of our new mutual fund to June 2020,” he says.

The virus pandemic not only keeps the economy under control, but also the capital markets. If retailers and hoteliers today apply for deferral of rental payments to bridge their slump in sales as a result of the prescribed standstill, sooner or later investors in open-ended real estate funds will also be affected. Through the funds, they are indirectly the landlords of the industries concerned.

Corona crisis different from financial crisis

The situation brings back memories of the financial crisis, when real estate values ​​had to be corrected and funds closed because too many investors wanted their money at once. Experts also expect returns from the funds to decline as a result of Corona. Nevertheless, the situation today is different from that in the financial crisis.

At that time, the epicenter of the financial crisis was in the real estate sector. High-risk real estate loans failed, the nervousness spread rapidly to other real estate classes. In droves, investors withdrew funds from the open real estate funds.

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Because they didn’t have enough liquidity buffers to earn all the claims, they were frozen. The funds bought time to monetize their properties. In general panic and under great time pressure, they sometimes made considerable losses, which ultimately also had to cope with the investors.

Today, there is no high-risk real estate loan at the beginning of the economic crisis, but a virus. “What we know from previous financial crises is that the spillover effects become more apparent the closer they are to the cause,” explains Steffen Sebastian, professor of real estate finance at the Ireb Real Estate Academy in Regensburg. However, the real estate is not in a crisis of confidence today.

In the corona crisis, retailers and hoteliers ask for rent deferrals because they are not allowed to open their shops and break down sales – and not because they have encountered problems due to a previously miserable business situation. For many companies, it is a stress test.

“Tenants from the hotel and retail sector have informed us that they want to negotiate their rental payments with us,” says Esteban de Lope, Managing Director of Deka Immobilien. The fund house is not alone in this. The other large providers from Commerz Real to DWS to Union Investment Real Estate also report on corresponding inquiries.

In the interests of investors

This puts the funds in a delicate position: On the one hand, they have an interest in keeping long-term leases – and thus secure income – in the funds and helping their tenants with a temporary solution.

On the other hand, they have to work for their customers, the investors. “We are committed to our investors and therefore do not grant flat-rate deferrals or rent reductions,” said a spokesman for Union Investment Real Estate. In plain language: deferrals remain individual decisions.

If rents are deferred, only the time of payment is postponed. They still have to be paid. But: “There could also be rent losses or rent adjustments here,” says Sonja Knorr, real estate fund analyst at the rating agency Scope.

The funds are also aware of the consequences: “Overall, it can be expected that the rental income of the funds will decline this year,” says de Lope from Deka. No fund manager can and does not yet estimate the extent of the decline.

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Investors are not entitled to immediate notification of deferral or loss of rent: “There are no ad hoc notification requirements for open-ended real estate funds. If the fund defers rents or even loses rents, it does not have to notify it immediately. This is enough in the quarterly notifications to investors, ”explains Carola Rathke, partner at the business law firm Eversheds Sutherland in Germany.

Some providers already confirm revaluations. A spokesman for Commerz Real, for example, reports that in the first three months of this year objects dominated by retail were devalued by the experts.

But this also includes: The problems in the trade already existed before Corona, they have now been exacerbated by the crisis. At the same time, Commerz Real emphasizes: “At the moment, however, we are not seeing any significant effects on the management of our properties.” The provider calculates the fund’s return at 2.0 to 2.5 percent, roughly on the previous year’s level.

Loss of yield

Analysts remain more skeptical about the outlook. Rüdiger Sälzle, head of the fund analysis firm Fonds Consult, expects yields to fall by 50 to 100 basis points due to the corona crisis.

“On average, I expect a return of 1.5 to two percent,” says Sälzle. That was calculated conservatively, but manageable in view of the general conditions. The drop in rental income is likely to be felt initially, alongside property valuation and interest on liquidity, one of the return components of the funds. Where new contracts are due and the new rents are significantly lower than the previous ones, this will also lead to devaluations for real estate, says Sälzle.

The bottom line, from today’s perspective, returns remain in the positive range. This speaks in a market environment with highly volatile and sometimes sharply declining stock and bond markets for real estate. Morningstar analysts are already showing that European investors are drawing more capital from equity, bond and mixed funds than ever before.

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There are still no official data for the real estate funds. Those of the BVI fund association for the first quarter will not be published until May. Scope analyst Knorr recognizes investment reluctance. “But we cannot see any waves of sales.”

The funds themselves report positive inflows in the first quarter. Commerz Real’s house investment has recorded inflows of 470 million euros since the beginning of the year. “The announcements of returns are still in the single-digit million range,” said a spokesman.

Union Investment Real Estate, whose funds UniImmo Germany and UniImmo Europe are among the largest open mutual funds, also reports on return claims in the single-digit million range. A spokesman for DWS says there are still positive net inflows – ie investments less return requests – and “generally no significantly increased return requests”.

Longer holding periods

In order to prevent a sudden, massive withdrawal of capital, which caused the funds to plummet during the financial crisis, stricter regulations apply anyway. Since 2013 it has been said that anyone who buys an open-ended real estate fund must hold it for at least two years.

Anyone wishing to redeem their shares can only do so with a notice period of one year. The illusion of a completely liquid trade in an illiquid product such as real estate was taken away from investors. Because when the going gets tough, the financial crisis showed, the funds have to sell their assets – and that is far more difficult than trading a stock package on the stock exchanges.

However, there is one exception for investors who bought their shares before 2013: they can withdraw up to EUR 30,000 from the fund every six months. “Today, however, the funds have sufficient liquidity to service these claims,” ​​says analyst Knorr, drawing attention to another difference to the financial crisis. The average liquidity ratio is 20 percent of the fund’s assets. 50 percent must be invested in real estate.

Debt financing is also more conservative today than in the financial crisis, says Knorr. Before the financial crisis, the average was 28.6 percent, today it is 15.1 percent. Some funds even had quotas of more than 40 percent.

With this credit lever, earnings could be increased in good times. This also applies reciprocally to the losses. “Today, a debt ratio of up to 30 percent is required by law. This is very conservative for real estate transactions, ”explains Knorr.

If funds fall below threshold values, for example that less than 50 percent of the fund’s assets are held in real estate, the capital management company must inform Bafin, who acts as the supervisory authority, explains Martina Sradj, partner of Eversheds Sutherland in Germany.

Private investors among themselves

Another stability factor: up to the financial crisis, semi-professional and institutional investors were invested in open real estate funds to a much greater extent than today. “Funds of funds or asset managers were very quick to return their shares at the time,” says Knorr. Today, these actors are not prohibited from investing in open-ended real estate funds. However, a wide range of alternative products has only developed for institutional investors in recent years, which is usually also cheaper.

The proportion of institutional investors in open-ended funds cannot be clearly quantified, but is significantly below the level of the financial crisis. Real estate funds of funds have disappeared from the market for private investors, explains Knorr.

The lawyer Rathke from Eversheds Sutherland adds: “Today, institutional and semi-professional investors are not directly prohibited from investing in open-ended real estate funds. However, there are strict requirements in terms of tax law, so that an investment in the open products is generally excluded. “

If people in countries like Germany, Austria or the USA are talking about relaxing the corona restrictions when shops are allowed to open again, then this should also make things easier for investors in open real estate funds. However, these measures are not a guarantee of a return to normalcy. This also applies to the real estate world. Sälzle, for example, points out the so-called second-round effects: “How the corona crisis will affect the real estate segment in the medium to long term is still completely open,” says the analyst. So the world is today in the “largest joint field trial in the home office”.

In the future, people will return to their normal jobs. But the office world doesn’t have to be the same. “The structure of the office space will change in the medium term. In the future, less space could be rented and employees could be given more flexibility in dealing with their home office, ”says Sälzle. What that means for the funds as a landlord is not yet clear.

Claus Thomas of BNP Paribas REIM, whose fund is due to launch this year, is not worried by this. He already has several objects in sight for sale, including a hotel in Munich. Although hotels in Corona are under particular pressure, he still assumes that use will develop above average in the long term, says Thomas. His fund should also focus on megatrends such as digitization and also invest in healthcare properties – two areas that could well benefit from the corona crisis.

More: Where investors can still find returns in times of the corona crisis

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Top managers are picky about stocks

“The insiders live out their countercyclical character,” says Olaf Stotz, professor at the Frankfurt School of Finance & Management. That means: The executives who know their companies better than anyone else go bargain hunting if they consider the shares of their own companies on the stock exchange to be undervalued.

According to Stotz, this is no longer so clearly the case. “The insiders’ belief that the stock market recovery would continue in the short term appears to be limited, otherwise they would have continued to buy at the same pace,” says the university lecturer.

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From the second week of March to early April, German listed companies reported almost 400 executives’ share purchases to the financial regulator Bafin. Since then, the number of purchases has almost halved with the sharply rising share prices. Purchases over several hundred thousand euros are also largely passé.

Accordingly, the insider barometer, which Stotz regularly calculates from transactions reported to Bafin exclusively for the Handelsblatt, has dropped somewhat from its nine-month high of over 145 points in early April. Most recently, it was just under 139 points.

At this level, the barometer theoretically signals that stocks should outperform other asset classes over a three-month period. However, Stotz would not currently over-interpret this – precisely because the insider barometer has already moved away from the recent intermediate high.

Dax cheap at 8500 points?

The university professor would only support a new, larger rush of purchase by the board members and supervisory boards for the shares of their own companies Dax-Stands around 8,500 points expected. In mid-March, the Dax even hit below 8,300 points.

He had thus lost 40 percent since his all-time high of 13,795 points in February: “At this level, the stock market seems to be favorably valued for many managers,” says Stotz. According to the professor of asset management, private investors should only get back into the market if there are new setbacks.

In the meantime, the Dax, with almost 10,600 points, is again almost 30 percent above its March low and has been “only” 20 percent lower since the beginning of the year. Not only insiders, but investors don’t trust the rally yet. David Lafferty, chief strategist at Natixis Investment Managers: “There is too much optimism priced in the markets”. In his opinion, the negative effects of the corona crisis should occupy the markets for several quarters.

Rolf Schäffer, one of the leading macro strategists at Landesbank Baden-Württemberg, sees it similarly: “The markets have currently opted for a rather positive interpretation and consider the glass to be half full.” This half full glass has “but clear” Jumps and could prove to be fragile in the event of further vibrations ”.

The largest insider purchases in the past four weeks show that board members and supervisory boards were more selective than in the first week and a half in March. Purchases were mainly made from companies that underperformed the Dax.

The biggest purchase was – as on March 10th – at Heidelberg Cement. From March 17, the Merckle family of entrepreneurs in particular once again accessed via Spohn Beteiligungs GmbH. The Merckle family is a major shareholder in Heidelberg Cement and often buys millions of shares.

The purchases of more than 70 million euros throughout March are very high even for the Merckle family represented on the Heidelberg Cement supervisory board. The building materials group’s stock fell more sharply than many other stocks and has also recovered less.

Purchases from Krones and Fresenius

At KronesIt is similar, the world’s largest bottling plant manufacturer for beverages and food, which is listed in the small value segment SDax. Here supervisory board member Petra Schadeberg-Herrmann bought shares through Schawei GmbH for a good five million euros. Schadeberg-Herrmann and board member Norbert Broger had already invested millions in the shares at the end of February and beginning of March.

The third largest share purchase in the past four weeks was also made by a company that insiders had accessed in early March. At the Healthcare company Fresenius This time, four board members and four supervisory board members bought shares. The Dax value of Fresenius shares had also suffered more than the leading index, but has since made up half of the loss.

It is not only the largest share purchases by insiders that are countercyclical, but also sales. For example, supervisory boards parted from shares in the real estate companies Patrizia and LEG, both of which have recovered well from short slumps.

Even more striking is the sale of the Hellofresh cookbox mail order company from the MDax of medium-sized values. Co-founder Thomas Griesel sold through TWG Ventures GmbH for shares valued at 14 million euros. Co-founder Dominik Richter also bought shares via DSR Venture GmbH, and board member Christian Gärtner also accessed them – but both on a comparatively small scale.

The Hellofresh share had also lost almost 30 percent between early and mid-March. However, it fell only slightly below the level at the beginning of the year and has soared to almost 70 percent since then. No other stock outperformed a German selection index.

The sender of recipes with suitable ingredients benefits enormously from the corona restrictions and closings of the restaurants. The company itself cannot foresee whether this will remain the case. In any case, management is reluctant to make a forecast for the current year.

More: Yield in Corona times: With which investments you can still earn money.

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Insider barometer: Top managers are picky about stocks

Managers only bought titles of their own companies on a large scale until the beginning of April. Since then they have held back – and are waiting for better courses. .

Fintechs feel disadvantaged when it comes to credit distribution

Berlin The run on the new quick loans from the state development bank KfW has started. But fintechs hardly play a role in the distribution of funds, and that annoys the young technology-driven financial companies: “It stunned me that the house bank principle should also apply to quick loans for small and medium-sized companies,” criticized Marko Wenthin, head of the online bank for business customers, Penta .

Although KfW is completely at risk with these loans, an entire market sector, the fintechs, is excluded from this lending process.

On Wednesday, the federal government opened another protective shield for corona-damaged companies. Companies with ten or more employees can apply for a KfW quick loan, which is 100 percent secured by the federal government. However, to the annoyance of the fintechs, these loans are only allowed to pass through the house banks such as savings banks, Volksbanks or private banks.

For the Penta boss, the fintechs, who are subject to bank regulation or use processes approved by the financial regulator Bafin, are predestined to participate in this public funding program. “We carry out the highest banking standards to identify our customers, the so-called KYC process (Know Your Customer), and can scale quickly thanks to our digital expertise,” said Wenthin.

The co-boss of the financial services provider for the self-employed, Kontist, agrees with the criticism. “After all, it is unreasonable to expect Penta, Kontist or other digital financial service providers to turn to a savings bank or cooperative bank especially for public aid,” says Sibylle Strack.

The Federal Ministry of Economics, however, assumes that only the use of established procedures ensures that the loans arrive at the company as quickly as possible. For this reason, lending within the framework of the KfW special program is based on the established house bank principle with the banks accredited by KfW, explained a spokeswoman. Even with a 100 percent liability waiver, certain customary bank procedures would have to be followed.

In contrast, the Federal Ministry of Finance (BMF) is open to criticism. “We are constantly reviewing proposals to further improve government aid programs. This also includes the proposal to involve fintechs in KfW lending, ”emphasized a spokeswoman. The chairman of the Fintech Council, who is located at the BMF, does not see the door slammed yet. “The processes are constantly being optimized at high pressure. I also see the greatest potential for working with fintechs there, ”said Chris Bartz.

Ineffective aids

Fintechs are not only criticizing the practice of granting KfW quick loans. For Kontist’s co-boss, the Corona emergency aids for self-employed persons and small businesses “go beyond the realities of life”. Her main criticism: Unlike the KfW quick loans for companies with ten or more employees, this aid should not be used as an entrepreneur’s wage. “Legislators must ensure the same conditions as quickly as possible, otherwise our clients will quickly face Hartz IV for basic security”, demands Strack. Hundreds of thousands of self-employed people could be affected.

The Federal Ministry of Economics does not explain why the emergency aid may not be used as entrepreneurial wages. But the ministry justifies the exceptions in the quick loan as follows: If the KfW quick loan is drawn on, a distribution of profits and dividends is excluded. “Due to the loan terms of up to ten years, customary market remuneration to business owners is excluded,” said the spokeswoman.

Not only fintechs like Penta and Kontist see opportunities in the corona crisis to offer help for their customers. FinAPI sees its strengths in fraud prevention. According to Florian Haagen, head of Fintech, which offers interfaces to bank accounts, among other things, applicants should be checked when granting emergency aid. “There are cases where fraudsters apply for emergency aid with little publicly available or undercover information,” he says. “In order to prevent fraud, we recommend checking whether the applicant is actually a so-called beneficial owner and the specified account is in their name or the company.”

This control is often difficult or impossible to do manually. Together with its parent company, the Schufa economic information file, FinAPI therefore offers banks the appropriate technology with which they can automatically check the applications and validate the account details provided. One is already “in very concrete talks” with various institutes.

More: Fintechs – That could be the crisis winners and losers.

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Dax closes almost four percent in the red

Dusseldorf The German Leading index Dax ended trading on Wednesday with a minus of 3.9 percent at 10,279 points. After an increase of 14 percent in just five trading days on Wednesday, the German stock market started to reverse again.

Sold today Wednesday apparently many foreign investors bought German shares. Because the Dax increased its minus significantly from midday trading to the opening of the US stock exchange, at the same time the euro slipped to $ 1.0918 during this period. Almost all Dax values ​​went out of the market with a minus.

Weak economic data in the US unsettled investors and also weighed on Wall Street prices. The Dow Jones already opened 2.2 percent in the red and then fell even further.

Investors were in the mood for news that the US industry cut production more in March than it had in 1946. The companies produced 6.3 percent less goods than in the previous month, as the central bank (Fed) announced in Washington on Wednesday. Overall production – to which utilities and mining also contribute – shrank by 5.4 percent.

US retailers’ sales also fell 8.7 percent in March from the previous month due to the corona crisis, the Department of Commerce said in Washington on Wednesday.

And last but not least, the US banks are suffering from the corona crisis: Due to provisions in the billions due to bad loans, the profits of Goldman Sachs, Bank of America and Citigroup almost halved.

In Germany, in addition to the weak US data, speculation that the German government was not in such a hurry to relax contact restrictions in the virus crisis caused the Dax to slide ever deeper into the red. And after having won almost 30 percent since the corona crash low in mid-March.

Just yesterday, the prices of some stocks had made investors forget that the world was in the middle of an economic crisis. So the course of the Tesla-Share more than doubled since mid-March. The Dax 30 values ​​could be about Wirecard have increased by around 35 percent in the past four weeks.

“The current crisis is like an accelerator of trends that have worked before,” says Jochen Stanzl from online broker CMC Markets. It was used as an excuse and pretext by companies that had previously had problems to carry out restructuring that was long overdue. And it is the reason for the crisis winners to expand even faster.

However, there are many crisis losers. For example, the engine manufacturer MTU, which was down 6.9 percent on Wednesday at the Frankfurt trading venue at the close of the stock exchange. The growing number of canceled orders from the US rival Boeing does too airbus– investors nervous. The shares of the European aircraft manufacturer lost around 8.7 percent.

After all: The new infections with the Covid 19 virus appear to be stabilizing or decrease. That is why there is talk in many, but not all, countries of easing contact barriers. Governments and central banks are throwing huge support packages on the market and pledging to do more when in doubt. So are you okay?

“I’m afraid the real reality check could still come,” says CommerzbankForeign exchange analyst Antje Praefcke. The market had put up with the previous “shockers” like the US labor market figures relatively well. So far, however, they would not have reflected the full extent of the effects of the “century recession”.

Many questions would remain unanswered: Are the production and supply chains really recovering quickly? Does consumer behavior change permanently? What about the recovery of the economy? “The big end could still come and give the market another cold shower,” says the analyst.

Investor sentiment also expects a sell-off on the German market, even if this may no longer push the Dax towards the 8200 point mark. “Investors should not run after the rising prices,” advises Stephan Heibel after evaluating the Handelsblatt survey Dax-Sentiment.

Meanwhile, there are increasing voices that the stock market lows from the end of March will be tested again. Should such a correction set in, there is a risk of a loss of 20 percent or more, depending on the market.

The problem with such forecasts: If a unanimous opinion has formed, it usually turns out differently. As a result, a full-fledged bear market is threatened with new lows, or the bear market is already behind us.

Look at the individual values

Varta: The battery manufacturer’s share, which traded almost nine percent lower on Wednesday at the close of trading, is moving into the focus of hedge funds that are betting on falling prices. The five participating funds have increased this speculation to 6.31 percent of all freely tradable shares in the past few days – a comparatively high ratio.

Such a short sale, as it is called in the technical language, consists of two different trading activities. For one thing, a hedge fund borrows from you Varta-Shareholder (for example, a mutual fund) share certificates and sells the papers.

Apparently that has happened in the past. On March 31 and April 8, for example, the Varta price fell in the meantime by a double-digit percentage – and this with a high trading volume. Last month, the average volume was around 272,000 pieces per day. On March 31, however, almost 750,000 Varta papers were traded, and on April 8, more than 484,000 pieces.

On April 9, the hedge fund Maplelane Capital reported that it had reached a short sale rate of 0.5 percent. Quotas below 0.5 percent do not have to be reported to the Bafin financial regulator.

But now the second trading activity is pending. The hedge funds must buy back the shares as cheaply as possible and return them to the lender. Not an easy task, as a small calculation example shows.

Because a short sale rate of 6.31 percent means: 2.55 million shares have to be bought back. With an average daily volume of 272,000 shares, this buy-back must be carefully dosed so that the Varta price does not rise rapidly and puts the hedge funds under pressure. Because they want to buy back cheaply.

Adidas: The addition of a billion dollar government loan does not help the share either. Although the paper had been 1.3 percent higher in pre-exchange trading, the shares dropped 4.7 percent from regular trading. The sporting goods group raised three billion euros from the development bank and major banks. Two-thirds of the remuneration of the Board of Management is deleted, and the dividend is also canceled.

Adidas suffers from the fact that practically all of its own stores in the western world have been closed for four weeks – including those of independent sports retailers. The stock had lost almost 50 percent since mid-February, but has risen by around 25 percent in the course of the stock market recovery in four weeks.

Fraport: The travel restrictions to curb the corona pandemic have at the Frankfurt airport operator Fraport led to a slump in business. The number of passengers fell by 62 percent to 2.1 million in March alone. The development continued in April: In the first two weeks, the passenger volume fell by over 95 percent. At the close of trading on Wednesday, the paper was down 4.8 percent.

Kuka: The Augsburg-based supplier has a large order for 5,000 robots for the car manufacturer BMW pulled ashore. This news initially caused the share to rise by 1.4 percent, but by the close of the stock market it had slipped significantly again and was 3.9 percent weaker from trading.

The systems and other technologies for the automation of production are to be delivered to BMW plants worldwide in the next few years, where they will be used primarily in body construction Kuka With. The two groups did not comment on the order value and the delivery period.

Oil prices are slipping

Brent oil from the North Sea is heading for its 18-year low from late March ($ 21.65): It fell 6.6 percent to $ 27.62 a barrel. The prices had already dropped significantly yesterday.

After all, according to the International Energy Agency (IEA), global oil demand will be weaker in April than it has been in a quarter of a century. It will drop by an average of 29 million barrels (159 liters each) a day, the IEA predicted in its monthly report on Wednesday.

“April could be the worst month – it could go down in history as black April,” said IEA chief Fatih Birol. A drop in demand of 9.3 million barrels a day is forecast for 2020. Such a sharp drop in demand cannot be compensated for by a reduction in the oil supply, the organization emphasized.

What the chart technique says

Even if the chart technique gives the Dax potential up to 11,030 points: In the short term, the indicators signal falling prices. Because the leading German index is considered overbought after an increase of 14 percent in the last five trading days before Wednesday alone, so it rose too quickly too quickly.

“At least in the short term, the downward risk seems to be higher than the upward chance, especially since the steep, almost four-month upward trend should not last too long,” say the chart technicians at Düsseldorfer Bank HSBC.

The structural picture of the individual Dax 30 values ​​has not yet brightened. All shares are listed below the 200-day line, which signals the long-term trend and underscores the still dominating, overall downward trend.

“When planning wealth, the rule is: never get out completely!”

Here is the page with the DAX course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database.

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