Consumer advocates and the banking industry are promoting uniform supervision


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.


“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”


Hamburg demands taxes from M.M. Warburg back

Cologne So now: The Hamburg financial administration is taking action at the private bank M.M. Warburg through. For the years 2007 to 2009, the tax authorities require repayments of 160 million euros.

It is a new gait by the Hamburg tax authority, the M.M. Warburg had granted for many years. Although it had long been known that the private bank was involved in cum-ex transactions in many ways, the tax office did not respond. Cum-Ex transactions are share deals around the dividend date, with which the actors can be reimbursed once or twice for a capital gains tax that has been paid only once.

M.M. Warburg acted both as a seller and as a buyer of the shares. Typical of Cum-Ex transactions was the involvement of short sellers who sold papers with which they only stocked up after the dividend cut-off date.

“Good for taxpayers, but an embarrassment for the Hamburg Senate,” said Fabio De Masi, deputy chairman of the parliamentary group of the party “Die Linke”, the decision of the authority. “A judge in Bonn saved Hamburg from losing millions with his verdict on cum-ex transactions. The Hamburg tax authorities had known for years that Warburg’s transactions would have made no sense at all without deliberate Cum-Ex design, ”said de Masi.


Just over a month ago, the 12th Grand Criminal Court of the Bonn Regional Court had sentenced two British stock traders, first as bankers at Hypovereinsbank and then involved in the cum-ex business with the finance company Ballance. Her best customers included M.M. Warburg.

Warburg should pay 176 million euros

Both the group and the banking subsidiary Warburg Invest were involved in the process. The court later severed the Warburg Invest case, but not against the M.M. Warburg group. With the judgment, it ordered the bank to collect 176 million euros in proceeds from the crime.

The bank defends itself. In their view, the years up to 2009 are already time-barred. In addition, the entire tax cannot be levied, after all, many actors have participated.

In the Bonn proceedings, the bank stated that it was prepared to repay the profits from the business regardless of the recognition of a debt, but not the full tax. “The majority of the difference between the amounts mentioned was received by other market participants, some of whom are being investigated,” the bank said at the time.

The Hamburg authorities apparently no longer share this view. It is not entirely clear how the sum of the recovery notices is made up, but the main issue is probably the gross amounts from the tax refunds.

The tax authority now judges the statute of limitations as the Bonn judges. For the years 2010 and 2011 M.M. Warburg recently paid his tax liability – at least for the time being.

The institute transferred a good 50 million euros to the tax authorities. The appeals continue. “The Warburg Group and the Warburg Bank never had the intention of engaging in, promoting, or participating in agreements that were contrary to tax law,” said a spokesman.

Hamburg also hesitated for a long time with regard to the years 2010 and 2011. Only when the Federal Ministry of Finance intervened did the tax authorities claim the tax back.

More: As the Hamburg bank M.M. Warburg rejects allegations of influencing tax matters.


Ten major banks are accused of manipulation of the corporate bond market

Deutsche Bank

The German money house is accused of years of manipulation.

(Photo: Reuters)

new York A US lawsuit accuses ten of the world’s largest banks of manipulating the corporate bond market. According to this, the money houses – including Deutsche Bank – have been asking for high prices for almost 14 years, as can be seen from court documents on Tuesday. As a result, investors were financially damaged.

The accused financial institutions include JPMorgan Chase, Bank of AmericaBarclays Citigroup, Credit SuisseDeutsche Bank Goldman Sachs, Morgan Stanley, Royal Bank of Scotland and Wells Fargo. Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs and Wells Fargo declined to comment.

More: Ex-top manager of Deutsche Bank sentenced to prison.


ECB is working on a bad bank

In the corona crisis, governments and banks and their supervisors do everything they can to enable companies to survive: States take on financial guarantees, partially relax the conditions for lending and reduce the requirements for banks to back up their risks with equity. But what will be the consequences in the medium term?

Andrea Enria, the Chairman of the Supervisory Board of the European Central Bank (ECB), also faces this question. He works on the concept of a so-called bad bank: it could later take on bad loans and thus relieve the commercial banks of accrued risks. The Financial Times had first reported this.

As can be heard from financial crises, the project is at a very early stage. The Commission of the European Union (EU) apparently has relatively little choice. The EU, which would be responsible for implementing such a concept, is not currently working on it. However, a spokesman said: “If it becomes necessary to expand our range of instruments, we will examine all possibilities.”

Enria had already made a similar proposal in 2017 – but in a different context. At that time he was still the head of European banking supervision (Eba). The idea was not very well received.

German supervisory authorities were already critical of plans for such a settlement bank (bad bank) at that time – and little has changed. Because it would benefit institutions in southern Europe significantly more than money houses in northern Europe.

In addition, as in the debate on euro bonds, the question would arise who pays for the financial burdens, it is said in German finance circles. It would also have to be clarified whether the construction would be considered state aid by the EU Commission.

Early discussion

It is legitimate to think about preventive measures in the course of the corona crisis to prevent problems with banks, say people familiar with the topic. But there are a number of critical questions in the debate about a bad bank that need to be dealt with in detail. One question is why the problem of bad loans should be tackled right now – and not only at a later point in time when it is clear how big the burden of Corona will be in different industries and regions.

So-called non-performing loans (NPLs), i.e. loans with slow interest payments or repayments, have been a problem for domestic financial institutions in Greece and Italy in recent years. In both countries, however, the number of these bad loans has been significantly reduced. The sale to risk-tolerant investors such as hedge funds made a significant contribution to this.

These investors took out the loans at reduced prices, hoping for future profits. For the banks, this was nevertheless associated with fewer losses than if they had written off the positions in their balance sheets completely. With the advent of the corona crisis, however, investors’ willingness to take the risks of such loan purchases has decreased significantly.

At the same time, banks are under real pressure to be generous in lending. Although the financial system appears to have been stable so far, a feared rise in the feared NPLs can be expected in all countries.

Memory of the financial crisis

Settlement banks have been created by governments in many countries since the financial crisis, which peaked in 2008. In Germany, for example, the collapse of what was then Hypo Real Estate (HRE) was prevented with billions of euros. State participation in the Commerzbank stems from this crisis. In the USA, ways were also created to shift risks from the banks to the state budget – unlike in Germany, the state actually did a business with it.

After the crisis, politicians and supervisors wanted to prevent taxpayers’ money from being used again to save banks. There were also fears that the possibility of government risk-taking would lead the banks to recklessness – the moral hazard problem is well known.

Therefore, the Single Resolution Mechanism (SRM) was created in the EU. It is intended to make it possible to wind up individual banks and to ask their shareholders and in some cases creditors to pay without causing panic in the financial system or requiring the use of state money.

It is not certain whether this mechanism would cope with an increase in various problems in the banking sector – it has not yet been tried and tested. In addition, the problem of assuming risk is very different today than before and in the financial crisis: Now banks are expressly encouraged to take risks.

More: Why a bad bank is a good concept


According to Nicastro, Italian companies need even more money

Rome Italy is deeply in crisis: the country that is most severely affected by the corona virus in Europe with more than 23,000 deaths is experiencing a hard recession due to the lockdown and the fact that production has been stopped for more than a month.

The International Monetary Fund has just estimated a slump in growth of 9.1 percent, significantly more than the forecast for the euro zone of 7.5 percent. Italy also has large debts and therefore less financial scope. “The collapse is violent,” says top banker Roberto Nicastro. “The crisis can be overcome at the beginning of 2021 at the earliest.”

Nicastro is one of the most renowned bankers in Italy. He used to be director general of Unicredit, today he is Vice President of UBI Banca and also a European advisor to the financial investor Cerberus.

The top banker warns: Now Italy has the choice. “Either we can get the relief measures started quickly, then we can classify the crisis as temporary. Or we wait. ”But that is the worse alternative. Then there would be irreparable damage to the country.

The government’s first aid package for the real economy in early April has a volume of EUR 400 billion and is designed to bring liquidity to companies. Since then, there has been a flood of applications for emergency loans and credit deferrals at the banks. But the transmission has problems. So much so that the central bank Banca d’Italia had to specifically write to the financial sector to “intensify efforts” to facilitate access to credit in this phase of the national emergency.

Italian banks in a dilemma

The risk of default is too great for many banks. Credit losses are impending, even though the state takes over a large part of the guarantees. Because these are limited to 2020, as Nicastro explains. In addition, the state only guarantees 100 percent for smaller companies with loans of up to EUR 25,000. “With the larger ones, the bank is involved and will be careful not to give the money to those who cannot repay it.”

Nicastro sees the domestic banks in a dilemma: “If we give the money quickly so that the companies can start again quickly, we risk criminal problems. Or we take the strict regulations into account and accept a time delay. ”

The banks would at least need the opportunity to identify attempts at deception, the Milan financial expert says. After all, there are at least 1.5 million customers who have requested loans and around one million customers who have asked their bank for an advance payment for short-time benefits.

In March, the ECB’s banking regulator approved changes to the equity guidelines to help banks. This should help in particular the money houses in the southern European countries, many of which are still groaning under bad credit from the 2008 financial crisis.

“Of course, the banks know very well that this and the postponement of the stress tests are only temporary help,” Nicastro puts into perspective. “Everyone is aware that there is now a buffer until the crisis is over.” The rules themselves would not be changed, it was about provisional measures.

Nicastro, however, does not see the danger of a systemic banking crisis in Italy due to growing loan defaults and melting yields. The financial industry could survive the corona pandemic and its effects.

Recapitalization and reduction of contaminated sites

This also applies to problem houses like Monte dei Paschi or Banca Carige. The banks have been recapitalized. The domestic institutes have also made good progress in dismantling the contaminated sites. “The non-performing loans fell from the peak in 2015/16, when they were at twelve, thirteen percent, to four percent, which is a significant improvement.” In addition, there are around 50,000 employees downsizing in the industry to date, and without Redundancies.

Nicastro does not consider mergers or acquisitions to be urgent, not even in the face of the corona crisis. Because size is not the decisive factor. “What matters is technology and competence.”

In Italy, the most innovative bank is not one of the big ones, but Banca Sella, an old private bank, number 16 in Italy. And the greatest profitability is achieved by Credito Emiliano, the country’s 12th largest bank. “It’s about good management. But that also applies in Germany, I think of N26 and on the other side ING-Diba. These are not big banks, but they grew fastest. ”

Nicastro is skeptical about the EU summit on Thursday. “The logic should lead to success, we are constructive and optimistic, but I don’t know whether that will be enough.” The use of the European Security Mechanism EWS “without troika” and the introduction of corona bonds, which are now being disputed Elements for political rhetoric in Italy with a view to voters.

“What we need is a small Marshall Plan, so we share the cost,” says Nicastro. Like others in Italy, he calls for uniform aid programs and not just emergency loans. “I believe that there is an objective interest in the Europe system to ensure that the necessary investments are made to deal with the crisis.”

A country like Italy cannot get out of the emergency alone and quickly. “It is clear that the aid packages are not enough for Italian companies, that more money is needed.” Because Italy cannot raise five percent of the gross domestic product like Germany or like the USA eleven percent, but only 1.3 percent.

According to Nicastro, the more closed the European Union is to the corona crisis, the better the second virus can be combated: the growth of populist forces. “We cannot afford a delay.”

More: Italian Prime Minister Conte continues to insist on euro bonds.


ECB supervision decides further relief for banks

Frankfurt skyline

115 financial institutions, including Commerzbank and Deutsche Bank, are currently monitored by the ECB’s banking supervision.

(Photo: dpa)

Frankfurt The ECB’s banking supervisory authorities are making further relief for money houses in the euro area due to the corona crisis. The capital guards to hedge against market risks would be temporarily reduced, the bank guards announced on Thursday in Frankfurt. This decision is said to respond to the significant price fluctuations on the stock exchanges since the virus outbreak.

Among other things, this should ensure that the institutions continue to provide market liquidity and act as market makers on the stock exchanges. The European Central Bank (ECB) has been responsible for the control of large banks in the currency area since autumn 2014. It currently monitors 115 money houses, including the Commerzbank and the Deutsche Bank.

The ECB’s banking regulator plans to review the move after six months. You and the other European supervisors had already given the financial institutions a variety of facilities in the past few weeks. Among other things, you want to ensure that credit flow in the economy is supported in times of crisis.

For example, banks can make full use of the capital and liquidity buffers. In addition, capital instruments that have not yet been recognized as core capital can also be used to meet capital requirements (P2R) in the future. The European bank stress test planned for this year has also been postponed to 2021.


Vatican Appoints New Chief Financial Officer

Pope Francis

The Vatican has been trying to implement international anti-money laundering regulations for about ten years.

(Photo: dpa)

Rome The Vatican has appointed financial specialist Giuseppe Schlitzer to head its AIF financial supervision. Schlitzer replaces Tommaso di Ruzza, who had been suspended in the course of an investigation in the autumn, the Vatican State Secretariat announced as the government of the Papal State on Wednesday. Schlitzer should run the daily business.

The Papal States have been trying to implement international anti-money laundering provisions and reform the Vatican Bank IOR for about ten years.


Goldman Sachs and Bank of America halved profits

Bank of America

Bank of America suffered a slump in profits due to high provisions for bad loans.

(Photo: AP)

new York The profit of the US investment bank Goldman Sachs has halved in the Corona crisis due to impending credit defaults and increased costs. Earnings fell 49 percent to $ 1.12 billion in the first quarter, the institute said on Wednesday.

In contrast, earnings decreased only one percent to $ 8.74 billion. Provisions for bad loans quadrupled to $ 937 million at the end of March, from $ 224 million a year earlier.


Cartel Office enables Tui to sell package tours


The Cartel Office approves Tui’s new insurance model. The final assessment by the Bafin is still pending.

Dusseldorf For Europe’s largest travel group Tui rescue comes into view. As the Bundeskartellamt announced on Tuesday, the holiday organizer from Hanover was given permission to set up a joint insurance fund to secure customer money with the competitor DER Touristik. Both groups want to bring 130 million euros in liquidity to him.

In order to reliably secure customer down payments, without the tour operators being allowed to accept no money for vacation packages, the financial regulator Bafin der Tui – as well as the Rewe subsidiary DER Touristik – had issued a final ultimatum by April 28.

After the bankruptcy of Thomas Cook, the Bafin reviewed the old model of the two groups, a mutual insurance company with the name of the German Travel Insurance Association for Mutuals (DRS VVaG), and judged it to be inadequate.

However, the first attempt at rectification failed. A consortium of reinsurers, who initially wanted to provide adequate “coverage” with the DRS, postponed their commitment after Tui stopped doing business with Corona in mid-March and applied for government aid.

Shortly thereafter, the two competitors agreed on a plan B. On March 27, they notified the Bundeskartellamt of their intention to provide the DRS, which until then had only had six million euros in capital, with enough liquidity to be able to use it as its own insurance .

The money now comes in part from a EUR 1.8 billion KfW loan that the state granted to Tui a few days ago via the house banks. Rewe also announced before Easter that it had increased its own credit lines by one billion euros with its house banks.

The final assessment of the new insurance model by Bafin is still pending. With the financial supervision, however, it was revealed that Plan B had already been agreed with Bafin prior to the application to the Federal Cartel Office.

More: Europe’s largest travel company clears the crucial hurdle for the KfW aid loan: the banks agree to the loan from the state development bank.