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.


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.


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.


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


DAX outlook: Exchange experts expect further price falls

By agreeing with Opec-plus, the global oil industry, economies, and other oil-dependent industries could avoid a very deep crisis, said Daniel Yergin of information service provider IHS Markit. “It prevents stockpiling, which takes pressure off prices when normalcy returns – whenever that will be.”

The wide-ranging restrictions on public life in many countries are having an impact on the economy, and the oil price has dropped 50-60 percent this year. “We do not expect a sustained recovery in the oil price until tense demand is eased again in the third quarter,” said Harry Tchilinguirian of BNP Paribas. These are not good signs for the German stock index (Dax), which will start trading again on Tuesday.

Last week’s market developments seemed to be fueled by the hope that the worst of the corona crisis would soon be behind us. Won on weekly view the Dax almost eleven percent, which is the most since November 2008 – on Thursday alone it was 2.2 percent. However, optimism cannot be determined from the economic indicators.

The latest bad news in short: The mood of the US consumer continues to collapse in view of the virus. The consumer confidence barometer in April fell to 71 points from 89.1 points in March, the University of Michigan said Thursday. This is the lowest level since December 2011. At the same time, the level of initial jobless claims in the US remains awesome, at 6.6 million a week through April 4.

Federal Reserve steers against the crisis

Federal Reserve chief Jerome Powell even warns that the US economy will sink into mass unemployment. For Thomas Gitzel, chief economist of the VP Banken Group, it is clear: “The decline in social product in the second quarter will break negative records.” Economists understand social product as the goods and services produced in an economy.

However, like all other central banks around the world, the US Federal Reserve is doing everything it can to at least mitigate the consequences of the slump. With additional emergency aid of over $ 2.3 trillion, the Fed wants to support the small and medium-sized companies in the United States that have been hit hard by the crisis.

The states are also generous in Europe. With aid programs worth more than 1.5 trillion euros, they are fighting the effects of the corona crisis on the economy. In order to finance the debts raised, “states will try to keep interest rates extremely low for years to come,” says Daniel Kerbach, chief investor at Merck Finck.

So far, the stock markets have shown behavior typical of bear markets. A deep fall was followed by a clear countermovement. “But as we know from historical crises, the phase of initially disoriented fluctuations in the capital markets can drag on over a long period of time,” says Daniel Schär from Weberbank. In the financial crisis, violent price drops and strong countermovements had alternated for half a year in close succession.

The market low was only reached after five months. Therefore, the market expert is only assuming an intermediate step in the current recovery of the stock markets. In the past, the phases were twelve to 60 months. It took so long to overcome such a serious crisis.

Profits could plunge 50 percent

The effects can also be seen in the yields. “This year, corporate earnings in the German Dax share index could plunge 50 percent and more, more than in previous recessions, when earnings fell by an average of 35 percent,” feared Christian Kahler, chief strategist at DZ Bank. After previous recessions, the price peak in the Dax was only reached again after four years.

Corporate earnings would have recovered faster. In DZ Bank’s view, this means that the companies in the Dax would earn as much in 2022/23 as they did in the record year of 2018. “The index itself would not reach its old high of 13,800 points until 2024,” judges Bald.

The number of corporations that cut, cut or postpone dividends due to the crisis is increasing every day. “Especially in the Dax, this will leave its mark, since in addition to subscription rights, dividend payments are also included in the price,” says Ulrich Stephan, chief investment strategist for private and corporate customers at German bank. According to him, exchange-traded futures contracts on the dividends of the Euro Stoxx 50 index indicate that the market does not expect a rapid recovery in payments, even for the largest European companies.

Derivatives on dividends, which will not be paid until 2022, have also fallen by 47 percent at the top. In the current year, a 25 to 30 percent drop in distributions in the Dax is expected.

Look into the next week

For Robert Greil, chief strategist at Merck Finck, what will probably be the most noticeable economic news in the coming week will be the number of new US jobless claims on Thursday reported for the week ending April 11. In America, retail sales and industrial production are also due in March next Wednesday. The Fed’s “Beige Book” also gives an impression of the state of the US economy.

There is little important economic data in Europe. This includes the result of industrial production for the euro area in February on Thursday. However, the corona pandemic is not expected to have a significant impact until March.

Things are getting more exciting in China. On Friday, the gross domestic product is due in the first quarter, which has been badly affected by the corona virus. In addition, industry figures for March will be published, which will provide information on the pace of normalization in the Middle Kingdom.

Despite all the existing uncertainty, Christian Kahler from DZ Bank judges: “Anyone who buys shares during the coming quarters should achieve good long-term investment results.”

More on the subject:


Sale of Commerzbank subsidiary M-Bank is a long way off

Another major project of the “Commerzbank 5.0” strategy, on the other hand, has come to a standstill: Negotiations to sell the majority stake in the Polish M-Bank are on hold, according to the Handelsblatt. Experts believe that the goal set by CEO Martin Zielke in December of completing the sale by the end of 2020 can hardly be achieved.

Because of travel restrictions and barring contacts, it is currently impossible to conduct negotiations in Poland, said several people familiar with the subject. Many things like a tightened book check could not be done by video conference. In addition, Commerzbank currently needs a large part of its resources to deal with the crisis in Germany.

Commerzbank has not yet given up its goal of selling M-Bank. The team put together for this continues to exist.

Nevertheless, according to insiders, doubts are growing at the Frankfurt headquarters whether a successful sale can still succeed. The sales revenue originally targeted by Commerzbank could no longer be realized after the corona crisis, several people familiar with the negotiations told Handelsblatt.

A look at the Polish stock exchange underpins this assessment: M-Bank’s market value there has almost halved since the beginning of the year – from 3.9 to 2.1 billion euros. The value of Commerzbank’s 69 percent stake has thus fallen to 1.45 billion euros.

Just one bidder

In addition, M-Bank sales were difficult even before the outbreak of the corona crisis. Initially, a large number of institutions expressed interest in the fifth largest Polish bank, which is considered to be one of the most innovative financial institutions in Europe. These included the Polish subsidiaries of the major European banks BNP, Santander and ING as well as the Austrian Erste Group.

However, given the positioning of the national conservative government in Warsaw, which is committed to the “repolonization” of the financial system, foreign buyers have now said goodbye to the sales process.

The only serious bidder left, according to financial circles, is the second largest Polish bank, Pekao. The Polish state is indirectly involved in this through the insurer PZU. That other Polish institutes like Alior and PKO BP have not made an offer, was probably a political decision because the state also participates in these institutions, says banking expert Filip Mazurek from the consultancy firm Sollers.

The development is anything but encouraging for Commerzbank. Due to the lack of competition, negotiations had been difficult for the people of Frankfurt before the outbreak of the crisis, several insiders report. “Of course, if you only have one bidder, you won’t get the price you want,” said one of them. Commerzbank and Pekao were far apart in their ideas.

Speakers from Pekao and Commerzbank did not want to comment on the topic. CFO Bettina Orlopp said in mid-March that Commerzbank was still trying to sell M-Bank, but not at any price.

When its new strategy was announced in September, Germany’s second largest private bank assumed that it would have to sell M-Bank in order to finance its upcoming restructuring. Since the capital situation of the institute has improved, according to Orlopp this is no longer the case. “It still makes sense to sell M-Bank – but only if we can achieve the target price and if the transaction structure is right,” said the CFO. “Otherwise there will be no deal.”

“Sales process impossible at the moment”

The transaction structure is primarily about dealing with a multi-billion dollar loan portfolio in Swiss francs. M-Bank, like other Polish institutions, had awarded these on a large scale before the financial crisis. Because the Polish zloty subsequently depreciated significantly against the Swiss franc, the borrowers’ loans became unexpectedly expensive.

In October 2019, the European Court of Justice (ECJ) ruled that such loan contracts could become ineffective if they contained unfair terms. Polish courts have to decide in each individual case whether this is the case.

Since the ECJ ruling, the number of lawsuits and the number of cases in which Polish courts have ruled in favor of customers has increased significantly. M-Bank therefore had to significantly increase its provisions for these loans.

According to financial circles, Commerzbank hopes that it will be able to sell the franc loan portfolio in the course of an exit from M-Bank. In previous sales processes, the Polish regulator KNF had forced foreign banks to keep the franc loans.

Handelsblatt Morning Briefing - Corona Spezial

Consultant Mazurek does not believe that an agreement can be reached in the foreseeable future. “In my view, there are little to no chances that the transaction will advance in 2020,” he says. The prices are in the basement, the problems with franc loans are getting bigger.

The corona crisis would also pose many additional challenges for the banks. “There will be economic problems, bankruptcies and debates about loan extensions,” Mazurek said. “That makes a sales process impossible at least at the moment.”

The rating agency Fitch also has doubts as to whether Commerzbank can implement its strategy as planned. “Commerzbank is in the middle of a substantial restructuring that we believe could be thwarted by the ongoing crisis,” warned Fitch at the end of March.

From the perspective of those involved, it is difficult to predict how the M-Bank sale will continue after the end of the corona crisis. It would be no problem for Commerzbank to keep M-Bank, some say. However, this option is not particularly attractive because the Polish authorities have forbidden the M-Bank to transfer a dividend to Frankfurt for several years.

In addition, there is hope in Poland that Commerzbank will need the sales proceeds and the risk relief associated with an M-Bank sale sooner or later – and will therefore return to the negotiating table. “It is all just a matter of time,” predicts a person familiar with the negotiations.

More: Commerzbank board members warn – “The peak of the crisis is still ahead of us”


Financial regulators control the liquidity of large banks on a daily basis

Frankfurt When banks go bankrupt, it is often not because the capital buffers are too thin, but because of a lack of liquidity. In other words, the institutes simply run out of money. In the corona crisis, the central banks, financial regulators and financial institutions want to prevent this in any case. The issue of liquidity is therefore at the top of everyone’s agenda.

The largest, systemically important institutions in the euro zone currently have to give the European financial supervisory authorities their liquidity indicators and their internal plans for the management of liquid funds in conference calls, as several people familiar with the subject told Handelsblatt. A second group at somewhat smaller banks had to report to the controllers once or twice a week. The ECB’s banking regulator did not want to comment on this.

Compared to the 2008 financial crisis, banks now have thicker liquidity buffers. So far, according to information from the Handelsblatt, there have been no bottlenecks at any major European bank. But the tension is great among everyone involved. “In times like these, it cannot be ruled out that a lot will change from one day to the next,” says a person familiar with the discussions.

The so-called interbank market plays an important role in the liquidity management of financial institutions. Not only do financial institutions lend and lend liquidity there, but also money market funds, asset managers, companies and states.

During the financial crisis there were violent upheavals on the money market. Because after the bankruptcy of the US investment bank Lehman Brothers, there was a great fear that other institutions would collapse, everyone involved held their funds together instead of lending them to each other.

Everyone hoarded cash

There is no such mistrust of other financial institutions today, several bankers with whom the Handelsblatt has spoken in recent days emphasize. “In the corona crisis, there is no threat from other banks,” says one of them. “The challenge is the increasing liquidity demand from the real economy.”

Instead of investing excess funds in the money market, many companies are currently sucking themselves up with liquidity. They draw their credit lines from the banks and apply for additional loans. In doing so, they are reacting to the great uncertainty, after all nobody knows how long the corona crisis will continue and how the economy will cripple.

Asset managers and money market funds struggling with price losses and cash outflows are also currently failing to provide long-term liquidity. The same applies to many states and their funding institutions, which are in the process of supporting the economy with extensive aid programs. “At the moment, nobody is willing to spend money for three or six months,” reports one banker.

All of this means that banks can currently only absorb liquidity for a short time on the money market. There is a concentration of market participants on terms of up to one month, said Helaba capital market chief Hans-Dieter Kemler on Wednesday. “The market for long-term, unsecured transactions is currently rather difficult.”

Kemler does not want to know anything about a financial crisis 2.0. The situation is “not yet comparable to the situation we had in 2008 and 2009,” he said. At that time, many banks also had problems taking up liquidity in the short term. So you actually ran out of money.

The European banking sector is still a long way from this situation – and there are several reasons for this. For one thing, many institutions have significantly reduced their dependency on the interbank market since the financial crisis. On the other hand, the central banks provide the banks with liquidity on a large scale.

Toilet paper effect on the money market

“Compared to 2008, the central banks reacted promptly and very quickly,” says one banker. From the point of view of European financial institutions, it was particularly important that several central banks around the world decided in mid-March to make US dollars available to the money houses against the provision of collateral on a large scale.

Since then, banks have been able to borrow dollar liquidity daily from the ECB for seven days – and on more favorable terms than before. In addition, the ECB has launched a tender where institutions can borrow dollars for 84 days once a week. The institutes secured a whopping $ 76 billion on the first allocation and $ 28 billion on the second.

This instrument is important for European banks because they have a relatively large number of claims in dollars. Large parts of global trade, as well as business in sectors such as oil or aviation, are ultimately settled in the US currency. On the other hand, European banks have relatively little natural dollar financing – for example through stable dollar deposits from private customers or companies.

The institutes therefore normally borrow dollars on the international money market. But it is currently very difficult for them to get money there for more than a month. “Investors and banks have been hoarding dollar liquidity like many German toilet paper since the beginning of March,” complains one market participant. “The whole thing is an expression of fear.” He hopes that the state of shock will soon resolve again. “Everyone has to assume that there will still be toilet paper tomorrow and that I don’t have to store tons of it in the basement.”


You can see how big the concerns about the dollar money market are from the Libor-OIS spread. It shows how expensive it is to refinance in dollars for a certain period of time. The spread has widened from below 20 to almost 120 basis points since the beginning of February. However, it is still a long way off the highs from the financial crisis when the stress barometer climbed over 350 basis points.

Nonetheless, the situation is tense – and the central banks are in close contact with the banks. The Money Market Contact Group (MMCG), in which the ECB discusses the situation on the money market with bank representatives, exchanged views five times in March alone. For comparison: there were only four meetings throughout 2019.

In the MMCG, heavyweights are like Deutsche Bank, BNP Paribas, ING and represented UniCredit. And they are preparing for a persistently difficult situation in the long-term dollar money market, as can be seen from a summary of the March 20 debate. The tenor: It will be some time before trust returns and the situation improves.

More: Private investors are particularly affected by breakdown series on trading platforms.


Corona crisis: breakdown series in trading platforms increases risk of loss for private investors

Private investors are angry because banks’ systems are currently often overloaded and failures occur. The certificates business is particularly affected. .

Banks are rushing for KfW emergency loans

Frankfurt In the corporate customer business of Commerzbank There has been a state of emergency for a few days. Employees receive more credit requests via email and phone than ever before. Divisional CEO Oliver Haibt says: “The number of inquiries is currently more intensive than at the beginning of the financial crisis in 2008 and 2009.”

Since the past week, Commerzbank has received “a high four-digit number” of financing requests from corporate and entrepreneurial customers in the course of the corona crisis, explains Haibt. A good third of them meet the requirements of the state development bank KfW, which assumes a large part of the credit risk as part of aid programs.

If it is particularly urgent, Commerzbank makes advance payments and pays companies loans within a day. “This is possible because we as the house bank have known the companies and their business models for years.”

The Deutsche Bank, the largest German money house, also registers enormous interest. Already on Monday she had received more than 5,000 inquiries about corona. A bank spokesman said approximately 2,000 customers had made specific requests for KfW’s emergency loans. The first promotional loans have already been approved.

The big rush is also coming to KfW. The state bank itself said that it had received a total of 34 applications with a loan volume of almost two billion euros by Tuesday 12 noon. The lion’s share is accounted for by four large applications with a total volume of EUR 1.985 billion. A spokesman said that 30 applications were loan amounts of up to three million euros. The volume of these applications amounts to 17 million euros.

KfW special loans are intended to dampen the consequences of the corona crisis. Companies have been able to apply for these funds since Monday, and the first emergency loans were granted on Monday. They are part of the rescue package to combat the corona crisis that the federal government has just decided on. In total, it comprises the gigantic sum of 1.2 trillion euros.

This is the corona protective shield for the German economy

The KfW’s new loans are intended for companies that are temporarily experiencing financial difficulties due to the rapid spread of the corona virus and need liquidity to bridge the gap. Working capital and investments can be financed with the loans, which are guaranteed up to 90 percent by the state. KfW normally only promotes investments with its programs and shares the credit risk with the house bank in half. The funds are often discounted. In parallel, there are bridging or liquidity loans from the development banks of the individual federal states.

Full order books

In some cases, corporate customers had already tried to get KfW loans last week. “We already had a full ‘order book’ from the previous week, which will now be given to KfW as soon as possible,” says Stephan Ortolf, head of corporate banking at the top cooperative institute DZ Bank.

Numerous money houses report enormous demand. This also applies to private banks like Hypo-Vereinsbank, HSBC and BNP Paribas and for the German savings banks, which are market leaders in business with medium-sized companies. At Hamburger Sparkasse, for example, one of the largest of the 380 savings banks, several hundred inquiries for immediate funds and promotional loans were received on Monday alone. Other large savings banks report similar figures.

According to the German Savings Banks and Giro Association (DSGV) – similar to Commerzbank ¬, public-law credit institutions have partly made advance payments and paid out promotional loans, although the funds are only made available to KfW later. Deutsche Bank also offers customers bridging financing for loan amounts of up to three million euros, for which KfW leaves the risk assessment of customers to the house banks alone, even before the loans are officially available in April.

Not only is there a great demand for aid loans, there is also a great need for information about Corona. Deutsche Bank has set up a Corona Helpdesk that answers questions from customer advisors across the board – from questions about new bankruptcy law, short-time work benefits to emergency loans. The DSGV also registered “a very high volume of information requests and advice needs of affected companies” immediately after the start of the new funding programs.

Banks praise the form of aid: “The KfW programs are very flexible. They are strongly oriented towards the 2008 programs, but are being handled even more pragmatically, ”says Andreas Voglis, co-head of corporate customers at the HSBC money house in Düsseldorf, with a view to government aid during the financial crisis a good ten years ago.

How quickly companies get a KfW loan also depends on the size of the desired loan. With sums between three and ten million euros, the development bank checks faster than usual. According to financial circles, KfW endeavors to process a maximum of five working days.

In order to be able to help quickly, Commerzbank has set up an internal special fund with a volume of EUR 700 million in addition to the KfW programs. “We use this liquidity to pay out loans directly when necessary,” reports Jan Rolin, who is responsible for larger companies as the divisional board member.

There is a need for this. “There were already a handful of companies where the situation was so serious that we decided within a day and paid the loans immediately,” says Rolin. Most inquiries come from small companies and medium-sized companies with a turnover of between 15 and 500 million euros. Large corporations, on the other hand, have not yet applied for KfW loans.

Difficult considerations for banks

Observers are confident. Markus Berg, partner in the consultancy Berg Lund & Company and expert for regional banks, said: “The Sparkassen-Finanzgruppe and the cooperative financial group are very determined. As far as I can see, everyone in the two groups is pulling together – and at high speed. ”

Nevertheless, according to Berg, the money houses are sometimes faced with difficult considerations, even if they only take ten or 20 percent of the risk with the new KfW loans. “There are business models where it was questionable whether they were sustainable even before the crisis,” he says. “In such cases, the banks will usually choose not to finance it with KfW loans. Only grants can help the companies here. “

Handelsblatt Morning Briefing - Corona Spezial

Commerzbank also makes this clear: “Of course, as a bank we have to carry out an individual risk assessment for financing inquiries and decide whether a business model is sustainable,” says corporate client manager Haibt. “We continue to have this responsibility as a bank.”

In addition, there are still unanswered questions about the cases in which KfW aid is effective. This applies, for example, to companies that have chosen leasing as a financing alternative. Kai Ostermann, head of the market leader Deutsche Leasing, said: It is currently not clear whether and how this will be taken into account in KfW’s aid programs. He demands “to open all programs and measures for leasing”. Deutsche Leasing belongs to the savings banks.

More: Solo self-employed and small businesses should receive up to 15,000 euros in emergency aid


Federal Reserve is activating another emergency program

new York The Federal Reserve (Fed) does not give up. She tirelessly pumps money into the financial system in order to fight blockages that have formed as a result of the corona crisis. On Tuesday evening, she activated another emergency program from the financial crisis. As of Friday, the Fed is granting short-term loans to a certain group of banks and is accepting, among other things, stocks, municipal bonds and corporate bonds with good credit ratings.

The so-called primary dealer credit facility is intended to ensure “that the markets function smoothly and make it easier for banks to lend to companies and households,” said the central bank’s statement. 24 financial institutions are among the primary dealers with which the Fed deals exclusively in the financial markets. In addition to the large Wall Street houses such as JP Morgan Chase and Goldman Sachs also foreign banks like that Deutsche Bank, Barclays and BNP Paribas.

The program will be maintained for at least six months, the Fed said, which had also obtained approval from US Treasury Secretary Steven Mnuchin.

It is the Fed’s third major intervention in 24 hours and it shows how big the uncertainty has become in the financial markets. On Tuesday morning, the Fed announced support for the so-called commercial paper market. Large corporations use the market to issue short-term debentures and thus obtain cash – among other things to pay wages and suppliers. However, the market was practically frozen in the past few days because bond buyers – traditionally money market funds – stayed away. Therefore, the Fed will act as a buyer.

“The market is worth a trillion dollars and it is extremely important for American workers, businesses and savers who have a lot of money in money market funds,” said Treasury Secretary Mnuchin, who also had to approve this move, as he was like the primary Dealer Credit Facility is part of the Fed’s emergency response.

In addition, the central bank will intervene even more in the so-called repo market, in which banks obtain cash at short notice and deposit US government bonds as security.

Mohamed El-Erian, chief economic advisor to Allianz, welcomed the Fed’s recent initiatives. “All of this helps to reduce the risk of market malfunction,” he said on Twitter.

After a long hesitation by the government, the central bank and the finance ministry are finally pulling together. Mnuchin and President Donald Trump announced a comprehensive bailout package on Tuesday, which is said to be the largest of all time with a volume of more than $ 1 trillion, and which should also include consumer checks for American households. It remains to be seen whether this is enough to calm the markets.

Money market funds in particular have become more cautious in the past few days. “In uncertain times, everyone just wants to keep the safest papers,” says Krista Schwarz, finance professor at Wharton Business School in Pennsylvania. Apparently there is concern that the companies will not be able to repay the bonds.

The Fed is taking steps to ensure that companies and households can borrow money cheaply in various ways in order to bridge future defaults caused by the corona crisis. Companies have long since started using their credit lines with banks, which in turn makes banks cautious when granting new loans.

Wall Street houses have made billions in profits in recent years and have always stressed that they are more than adequately capitalized. After passing the stress tests, the Fed had allowed banks to buy back stocks and pay dividends on a grand scale. The institutes have now put the buyback programs on hold.

The Fed recently explicitly encouraged the institutions to use their capital and liquidity buffers so that lending does not stall. The institutions should also explicitly use the Fed’s so-called discount window to provide themselves with liquidity.

More: Read here how Trump wants to deal with the corona crisis with helicopter money


The corona virus as a party crasher at Deutsche Bank

Frankfurt The Berlin Philharmonic Orchestra with works by Beethoven and Prokofiev, President Frank-Walter Steinmeier as guest speaker and then a lavish party with 1,200 guests from politics and business. That’s how it was Deutsche Bank presented the ceremony for her 150th birthday in the concert hall on Gendarmenmarkt. The buzz in the capital should bring back a bit of the glory of the old days, polish up the image of Germany’s largest money house, symbolize the restart.

But the rapid spread of the coronavirus has destroyed these birthday plans. If the federal government strongly advises against major events, then Deutsche Bank cannot deviate. “This decision was very difficult for us,” write CEO Christian Sewing and Supervisory Board Chairman Paul Achleitner in the rejection to the guests.

Whether the ceremony will be rescheduled – completely open. The bank is currently planning from day to day. And behind the scenes, there is growing nervousness that Corona could ruin much more than just the celebration.

The strategy with which Sewing took up was sharply calculated from the start, so sharp that nothing unforeseen could happen. The big question now is: are the bank’s defenses strong enough to cope with the economic consequences of the corona pandemic?

Back in crisis mode, it could be called again. As so often in previous years.

Just a few weeks ago, Deutsche Bank looked revitalized. Earnings level: stabilized, albeit at a low level. The share: a worthwhile investment, for a short time the security again cost more than ten euros.

And there was a new, very respectable name among the major shareholders with a long-term investment strategy: the California Capital Group. All of this no longer made the broad shareholder community dream of a turn for the better, the turnaround actually seemed to be coming true.

But since mid-February, the stock has been rushing down again and exploring new lows. Hedge funds have long since rediscovered betting against the bank as a lucrative business. And the risk premiums on the derivatives market signal that investors are becoming increasingly alert.


The erratic ups and downs on the stock market show how quickly confidence in Deutsche Bank can wane again. The institute once made history as the financier of the Baghdad Railway, the heart of Deutschland AG or simply the largest bank in the world. Now, just in the anniversary year, a new low of the share is making headlines: 4.87 euros. This is less than a day ticket for the subway in Frankfurt.

Worried about the black zero

Not even the greatest optimists among analysts still believe that the bank can increase its earnings to between € 24 billion and € 25 billion by 2022 and achieve a return of eight percent. Fund manager Alexandra Annecke of Union Investment, one of the bank’s larger shareholders, speaks cautiously of a “very ambitious goal”.

Fear of a global recession has long since overtaken the delicate confidence of January. “Actually, you have to assume every day that Deutsche Bank issues a profit warning and revises its goals,” says a large institutional investor.

The bank can only hope that the financial professionals underestimate the institution. Because since Sewing took office in April 2018, the renovation has always been a race against time. “We are late in the business cycle,” said Stuart Graham, co-founder and partner of the renowned London-based analysis company Autonomous.

The corona crisis now threatens to further shorten the time that the bank has left for the restructuring. “If there is a recession and Deutsche Bank still only achieves low single-digit yields by then, it will quickly be in the red again.”

This is what makes the corona virus so dangerous for the bank. Red numbers could quickly raise concerns among investors whether a further capital increase is not necessary.

That would be the ultimate horror scenario, because the most recently used financial resources have had no effect from the point of view of critics: Since the financial crisis in 2008, Deutsche Bank has collected almost 30 billion euros in fresh money from investors – and at the same time spent 18 billion on fines.

The trip to international investment banking, which led the bank under the leadership of Rolf Breuer at times on par with the major addresses on Wall Street, drove the share price, dividends and remuneration for board members and investment bankers to record highs for a few years. However, the success was expensive, the risks on the balance sheet increased.

Several penalties that the bank has paid in the recent past go back to the era of Josef Ackermann – with his investment banking chief Anshu Jain. There were questionable US mortgage deals, windy stock deals with Russian oligarchs, and manipulations of key benchmark interest rates, such as the Libor, which is the basis of many deals in the global financial markets. The fact that Jain, together with Jürgen Fitschen, was even allowed to run the bank from 2012 to 2015 as a co-boss caused irritation not only for the regulatory authorities, but also for many customers.

“Trust is the beginning of everything,” it said 25 years ago in a commercial of the bank. But only under the sober analyst John Cryan, who replaced Jain, did this trust slowly come back. The fact that Cryan called the bank’s problems unusually open, but did not solve them, ultimately cost him the job.

So now it should be sewing. The Westphalian should lead the bank back to business with corporate and private customers. The institute took a lot of time for this self-discovery; more time than all competitors. Deutsche Bank sold off the fat years in which the economy in Europe and the domestic market was booming with changing bosses and variable priorities.

“A bit bogged down”

“We were a bit bogged down with previous strategies,” admits Fabrizio Campelli. The board member sits in a barren conference room of Deutsche Bank in London and is connected to Frankfurt by video, a golden winking cat peeks over his shoulder from behind. Campelli may not fly because of Corona these days. Deutsche Bank has drastically restricted business trips because of the risk of infection.

Campelli joined Deutsche Bank when it was still managed by Ackermann. The 47-year-old has been responsible for transformation and human resources on the board since January and has to provide solutions for everything that was not tackled by Sewing’s predecessors.