New bank president Zielke warns of loan defaults

Dhe corona crisis is leaving its mark on banks’ balance sheets. The new president of the Federal Association of German Banks (BdB), Martin Zielke, warned of many loan defaults at his inaugural press conference on Thursday. “We have to expect to get one of the deepest recessions in post-war history. This will result in corresponding failures, ”said the CEO of Commerzbank at the conference call. Zielke, who was elected the successor to Berenberg’s boss Hans-Walter Peters on Wednesday as the new president of the Association of Private Banks, believes that future impairments on outstanding loans are inevitable. Despite the high level of government liability and support programs, these would also be reflected in the banks’ balance sheets.

Banks cannot fulfill every wish

Markus Frühauf

Due to the crisis, the new bank president believes that it is inevitable that banks will not be able to fulfill every loan request. Even in the current emergency, the institutes would have to check every single loan application carefully and in defined processes. This applies to Zielke even if the banks only bear 20 or 10 percent of the default risk. “Believe me, we try to make a lot possible. We give every loan we can give. But we also have to reject customer requests if the regulatory requirements leave us no room for maneuver. ”

Zielke rated the various state aid programs in Germany as “one of the best in the world”. In the beginning there was still “sand in the gearbox” in the programs of the state development bank KFW, but it was successfully adjusted. The private banks alone had already paid emergency loans amounting to 3.5 billion euros to companies. He does not share the assessment that KfW loans are not in as high demand as originally expected: “Our employees do special shifts. We have weekend work to deal with this issue. They don’t do that if nothing happens. “

Like the Pfandbrief banks the day before, Zielke also opposed the three-month deferral of debt servicing on consumer consumer loans without interest. “It can’t be,” he said, prompting the misunderstanding to be resolved quickly.

He described the tightened banking regulation after the financial crisis as an important reason why the banks now had significantly higher levels of equity and liquidity than before. The decision of the banking supervisor to apply the rules flexibly in the current crisis was correct and necessary. Banks can now use up capital buffers and have to back loans with less equity. According to the European Central Bank (ECB), this has increased the lending scope of the 117 largest banks in the euro area by more than 1.8 trillion euros.

Requirements for euro bonds not met

Zielke cannot gain much from the bad bank proposed by ECB chief supervisor Andrea Enria, to which banks can transfer loans at risk of default and thus relieve their balance sheets. This is the wrong approach for non-performing loans that came from before the Corona crisis. When it comes to cushioning the consequences of the Corona crisis, it is too early to deal with a bad bank.

Zielke also doesn’t believe in the idea of ​​joint bonds between the euro countries (euro bonds). When it comes to joint liability, a common European economic and fiscal policy is an imperative. However, this requirement was not met. According to Zielke, extensive aid programs and new ECB bond purchases have already been launched in the EU to help countries such as highly indebted Italy, which calls for joint corona bonds.

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Dax current: Dax remains in the red – Wirecard shares rise by more than five percent

There are increasing voices that share prices will soon collapse again. The numbers in the “Big Five” stocks may be causing new turmoil. .

Dax current: Dax increases its losses – Wirecard shares increase by more than five percent

There are increasing voices that share prices will soon collapse again. The numbers in the “Big Five” stocks may be causing new turmoil. .

Corona crisis accelerates branch extinction

Dhe curve is pointing down, and nothing will change that quickly. For years, figures have shown that the network of bank branches in Germany is being thinned out. According to the Bundesbank, there were 44,100 branches throughout Germany in 2005, at the end of last year there were only 26,667. This means that the financial institutions have closed four out of ten of their branches in the past 15 years. There is little doubt that this trend will continue in view of the digitalization of banking and the pressure on margins that is weighing on credit institutions.

Daniel Schleidt

The corona pandemic could accelerate the large branch extinction considerably. In recent weeks, almost all banks in the region have closed numerous branch offices, usually referring to them, in order to protect the health of customers and employees and to slow down the spread of Covid-19. But what has been declared as a temporary measure could become permanent. It can be heard behind the scenes that many houses are also using the closure of individual branches as a test run to determine whether they are still needed.

Some branches are not only closed temporarily

Oliver Mihm is convinced that it will happen. Mihm is CEO of the Frankfurt-based consulting firm Investors Marketing and claims to be on the phone every day with CEOs of savings banks and cooperative banks in Germany. At the end of last week, the CEO of a large savings bank with around 80 branches told him that he would also no longer open the ten branches that he originally closed due to Corona, Mihm reports.

The matter is delicate, after all, no bank wants to give its customers the feeling that they are shrinking their branch network under the guise of health protection. However, on the basis of talks with bank bosses, Mihm’s consulting firm has revised the forecast that the number of bank offices in Germany will decrease to around 19,500 by 2025 by another 3,500. “We assume that after the end of the Corona crisis, a large number of the branches that are temporarily closed today will be closed by the end of 2021 at the latest,” says Mihm. This also applies to the Rhine-Main area – albeit less than the national average due to increased cooperation between savings banks and Volksbanks.

The central reason for the development is obvious: It is currently becoming clear that it is also possible without the positions available. Many branches are therefore no longer needed to meet the declining need of many customers for personal advice. A survey by this newspaper among regional banks shows that since the beginning of the Corona crisis, the number of digital account accesses, telephone consultations and the use of online offers have increased significantly in all companies.

More emails and chats

According to the Frankfurter Volksbank, the exchange between customers and consultants is taking place increasingly digitally, by telephone or by video conference. According to a spokeswoman, the Frankfurter Sparkasse also has a significantly higher volume of calls, emails and chats in the advice center. Commerzbank can be heard that mobile banking from home is being used much more than in the past, and a spokesman for Deutsche Bank lets it be known that in the Corona crisis, more customers than usual could have been activated for digital banking via the app.

In a European comparison, the branch network in Germany is traditionally tightly knit – too dense, as experts warn. Analyzes show that not only are fewer and fewer customers going to the branches, but that most customers are also willing to travel a few kilometers for a personal consultation. Only a steadily shrinking minority expects the house bank to have its own employees on the spot. “People want a personal contact, but it doesn’t matter whether they are two, five or ten kilometers away,” says Mihm.

There are many indications that the branch extinction will continue. For example, Frankfurter Volksbank has currently closed 23 of its more than 90 branches, Commerzbank continues to operate only six of its 20 branches in Frankfurt, and Frankfurter Sparkasse had closed 26 of the 73 branches until Monday, but has since reopened some.

None of the regional banks admitted that they did not want to reopen the currently closed positions. “The temporary closings are not a blueprint for regular branch closings,” says the spokeswoman for the Frankfurter Sparkasse. However, most of the houses also emphasize how well the advice works in the corona crisis, and point out that the branch network should be constantly checked.

That leaves room for interpretation. Mihm is convinced that the branch extinction is not over yet. If it is possible to expand digital services in return, he sees this development as positive. “Then both customers and banks could benefit.”

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Banks and savings banks: Corona crisis accelerates branch extinction

Dhe curve is pointing down, and nothing will change that quickly. For years, figures have shown that the network of bank branches in Germany is being thinned out. According to the Bundesbank, there were 44,100 branches throughout Germany in 2005, at the end of last year there were only 26,667. This means that the financial institutions have closed four out of ten of their branches in the past 15 years. There is little doubt that this trend will continue in view of the digitalization of banking and the pressure on margins that is weighing on credit institutions.

Daniel Schleidt

The corona pandemic could accelerate the large branch extinction considerably. In recent weeks, almost all banks in the region have closed numerous branch offices, usually referring to them, in order to protect the health of customers and employees and to slow down the spread of Covid-19. But what has been declared as a temporary measure could become permanent. It can be heard behind the scenes that many houses are also using the closure of individual branches as a test run to determine whether they are still needed.

Some branches are not only closed temporarily

Oliver Mihm is convinced that it will happen. Mihm is CEO of the Frankfurt-based consulting firm Investors Marketing and claims to be on the phone every day with CEOs of savings banks and cooperative banks in Germany. At the end of last week, the CEO of a large savings bank with around 80 branches told him that he would also no longer open the ten branches that he originally closed due to Corona, Mihm reports.

The matter is delicate, after all, no bank wants to give its customers the feeling that they are shrinking their branch network under the guise of health protection. However, on the basis of talks with bank bosses, Mihm’s consulting firm has revised the forecast that the number of bank offices in Germany will decrease to around 19,500 by 2025 by another 3,500. “We assume that after the end of the Corona crisis, a large number of the branches that are temporarily closed today will be closed by the end of 2021 at the latest,” says Mihm. This also applies to the Rhine-Main area – albeit less than the national average due to increased cooperation between savings banks and Volksbanks.

The central reason for the development is obvious: It is currently becoming clear that it is also possible without the positions available. Many branches are therefore no longer needed to meet the declining need of many customers for personal advice. A survey by this newspaper among regional banks shows that since the beginning of the Corona crisis, the number of digital account accesses, telephone consultations and the use of online offers have increased significantly in all companies.

More emails and chats

According to the Frankfurter Volksbank, the exchange between customers and consultants is taking place increasingly digitally, by telephone or by video conference. According to a spokeswoman, the Frankfurter Sparkasse also has a significantly higher volume of calls, emails and chats in the advice center. Commerzbank can be heard that mobile banking from home is being used much more than in the past, and a spokesman for Deutsche Bank says that in the Corona crisis, more customers than usual could have been activated for digital banking via the app.

In a European comparison, the branch network in Germany is traditionally tightly knit – too dense, as experts warn. Analyzes show that not only are fewer and fewer customers going to the branches, but that most customers are also willing to travel a few kilometers for a personal consultation. Only a steadily shrinking minority expects the house bank to have its own employees on the spot. “People want a personal contact, but it doesn’t matter whether they are two, five or ten kilometers away,” says Mihm.

There are many indications that the branch extinction will continue. For example, Frankfurter Volksbank has currently closed 23 of its more than 90 branches, Commerzbank continues to operate only six of its 20 branches in Frankfurt, and Frankfurter Sparkasse had closed 26 of the 73 branches until Monday, but has since reopened some.

None of the regional banks admitted that they did not want to reopen the currently closed positions. “The temporary closings are not a blueprint for regular branch closings,” says the spokeswoman for the Frankfurter Sparkasse. However, most of the houses also emphasize how well the advice works in the corona crisis, and point out that the branch network should be constantly checked.

That leaves room for interpretation. Mihm is convinced that the branch extinction is not over yet. If it is possible to expand digital services in return, he sees this development as positive. “Then both customers and banks could benefit.”

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The fall in prices is a warning sign for the global economy

The world has never seen negative oil prices. Even at a time when negative interest rates, i.e. negative prices for capital, appear normal, this seems absurd. A commodity that is transported out of the ground with a lot of work and capital should be worthless? Are producers even supposed to pay for buyers to free them from the burden of crude oil?

It is natural to attribute this grotesque market distortion to a dysfunctional financial market, on which a multiple of virtual barrels are pushed back and forth every day than is actually produced. But even if these explanatory approaches are justified, they fall short. The rapid fall in prices – 70 percent for Brent oil since the beginning of the year – is an expression of a global economy that has come to a complete standstill in the corona crisis. The oil market is sending a warning signal to those who hope that the global economy will soon recover from the pandemic.

Certainly: There is no shortage of economic leading indicators. The reliability of the raw material markets as a barometer of the global economy is also controversial. Over a longer period, the accuracy of oil or copper prices in forecasting global economic growth is rather poor. But no one can ignore the extent to which warehouses worldwide are filled because producers remain stuck with the raw material.

The drama started at the beginning of the week with a sudden buyer strike on the US commodity exchange Nymex. No buyers were found for the expiring May future of the US oil grade WTI, which the market participants are obliged to purchase crude oil at short notice in Cushing, Oklahoma. Because the bearings at the central oil node in North America are full or at least fully booked. At the same time, speculative investors apparently had to liquidate their positions in a panic. As a result, the price of WTI oil dropped to minus $ 37 in May.

It is quite possible that in the coming weeks it will come out that a few clever speculators have rented the remaining storage space in Cushing and have driven other market participants into ruin. Maybe it was “manipulation” like that Commerzbank– Raw materials expert Eugen Weinberg suspected. But that such speculative excesses are possible at all is because there is an abundance of oil and the demand in the corona crisis has plummeted. George Soros was able to push the British pound in the 1990s only because the Thatcher government wanted to hold on to an economically unjustified exchange rate to the German mark out of prestige.

Missed opportunities

A similar refusal to recognize economic reality can also be seen among the political leaders in the United States, Saudi Arabia and Russia. At the beginning of March, Russian energy minister Alexander Nowak broke a deal with Saudi Arabia and the other members of the Opec plus oil alliance. One reason was probably the retrospectively fatal assumption that the corona pandemic would not influence the demand for Russian oil too much. This was the beginning of the price war with the Saudis, which now leads to the world markets being flooded with oil at a time when it is least needed.

The opportunity to correct this mistake in the middle of April with a historic Opec plus deal involving the USA, Canada and other exporting countries left the Opec plus countries unused. Instead, they got bogged down in a small war with the little-important oil state of Mexico and confused the oil markets with flimsy compromises and bills about cuts in production. It became a deal that takes just under ten million barrels of daily production out of the market on paper, in reality maybe cuts seven million barrels a day, and moreover, it only applies from May.

US President Donald Trump was still a mediator in the oil price war, but did not come up with binding cuts. Now his administration is working feverishly on a rescue package for the US oil industry. Apparently, it is circulating on the markets, there is even discussion of paying shale oil companies for reducing their production. It would be the China model – of all things, in the motherland of capitalism.

The damage has already occurred anyway. If, in some countries, the demand for aviation fuel drops by 90 percent, much more than a few jobs in oil refineries depend on it. The corona pandemic is eating its way through industries. Especially since the second and third round effects of the crisis are not yet foreseeable. The crisis in the oil market offers a foretaste of what the world economy could face. It is time for everyone to recognize this economic reality. This applies not least to investors who are already afraid to miss the big rally in view of rising stock prices.

More: The uncertainty on the oil market is huge – China is taking the opportunity.

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Bear market rally: extremes on the stock markets: analysts fear new slumps

Many experts do not trust the current rally on the global stock markets after the unprecedented crash of the stock markets. There are many reasons for that. .

Corona: Banks want looser rules for state aid – economy

The EU Commission could exploit the legal leeway very flexibly to hold taxpayers liable again in an emergency.

It is becoming apparent that the great promise made by the governments from the financial crisis that they will never again bank banks clinging to taxpayers’ money could not be kept in the corona crisis. According to the Süddeutsche Zeitung Individual financial institutions, but also governments, are urging to loosen the strict conditions for government aid as a precautionary measure and at the same time to soften the directive on winding down clumsy banks.

If they were successful with this, taxpayers would have to assume the losses from banking business again. As early as March, when the corona virus was spreading almost unchecked in Europe, the EU Commission had announced that it was examining “whether it will be necessary to make the rules for state financial injections more flexible for banks”. This test is reported to be in full swing. In essence, the EU state aid law should serve as a door opener, where the EU Commission has great discretion.

“Under no circumstances should there be a blank check for state aid to the banks, nor does the state aid law give it away at all,” says Sven Giegold, MEP of the Greens. It cannot be ruled out that in the event of a worsening of the corona crisis, a state would also have to help banks in individual cases. “But that always has to be checked specifically.” Banks in Italy and Greece in particular are considered to be extremely vulnerable to crises. To this day, their balance sheets contain bad loans in the billions, which date back to before the financial crisis. Most recently, the ECB therefore discussed the establishment of a bad bank where these contaminated sites could be disposed of.

Further government aid to banks would break the political promise of the 2008/2009 financial crisis. In Germany, the rescue of German banks at the time has cost taxpayers around 68 billion euros. This includes sufficient guarantees, loans and capital injections. Chancellor Angela Merkel (CDU) had promised at the time that it should never repeat that losses from banking transactions had to be socialized. On request, the European Commission and the federal government announced on Wednesday that they were opposed to a change in the rules that had been adopted at the time for the resolution of tight banks.

“The Federal Ministry of Finance is strictly against the softening of the directive,” said a spokesman for Federal Minister of Finance Olaf Scholz (SPD). The European Commission also said that it had “no intention” of touching the rules on bank resolution. The banks are in much better shape today than they were then and have “sufficient liquidity buffers,” said a spokesman for the authority. Nevertheless, he conceded that the corona crisis could hit the banks “indirectly”.

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In Germany, too, there are fears that the foreseeable wave of bankruptcies among companies, but also the failure of home loans, could put many banks in trouble in the medium term. The concerns of the banks about large-scale loan defaults go so far that the financial institutions had refused to take on only a small part of the default liability for certain companies in the state-secured KfW loans. The state stepped in because they refused. In these cases, German taxpayers are now fully liable if house banks pass on loans from the KfW state development bank to their customers. It is piquant that the house banks collect three percent interest from the needy companies that want to save themselves from bankruptcy with the quick loans.

At the same time, the federal, state and local governments are busy supporting domestic banks. It was only in 2019 that the Federal Ministry of Finance encouraged Deutsche Bank and Commerzbank to consider a merger. Both banks had tried for years to develop a viable business model. The balance of the financial crisis is “devastating”, according to the board of the “Citizens Movement Financial Turn”, Gerhard Schick. It is now visible how much the citizens were burdened. “A family of four paid more than 3000 euros for the bankrupt banks.”

Coronavirus: Your opinion on the loosening:Readers’ discussion

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Apple Pay now also at Germany’s Volksbanken

The customers of the 841 Volksbanken now have extended options for contactless payment

Frankfurt The German Volks- und Raiffeisenbanken are on Tuesday Apple Pay started. This was announced by the Federal Association of Volks- und Raiffeisenbanken (BVR). First the newsletter “Finanz-Szene” reported about it.

In addition to the 800 or so Volksbanken and Raiffeisenbanken, according to the BVR, for example, the cooperative PSD banks are also starting with Apple Pay – but only months after the competition. The Sparkassen as the strongest competitor and Commerzbank have been offering the payment service of the tech group Apple to their customers since December Deutsche Bank as well as among others the smartphone bank N26 and the online bank ING join in even longer. The cooperative banks also wanted to start in 2019, but postponed the start at the beginning of December.

Paying by smartphone is just beginning in Germany. In addition to Apple Pay was already in summer 2018 Google Pay started, and various banks had developed their own payment apps. So far, however, only a few consumers have used the smartphone to pay at the checkout. According to various surveys, the proportion is between three and 30 percent.

In the course of the corona crisis, however, payment behavior could change significantly – at the expense of cash and, above all, in favor of card payments, but also paying by smartphone. According to the consulting firm Oliver Wyman, the share of cash payments after sales could drop to 32 percent by 2025 – and thus significantly faster than previously expected. For the past year, they estimate the cash share at 47 percent.

For Apple Pay, however, users usually still need a credit card. The Girocard, better known under its old name “EC card”, is much more widespread with 100 million in circulation, but is not yet available for Apple Pay. Some banks, including Volksbanken, are now offering their customers digital debit cards from the credit card company Mastercard at.

In this way, they want to ensure that not only a small proportion of customers can use Apple Pay. The cooperative banks have around 26 million current accounts, but according to the BVR have only issued five million credit cards.

More: The limit for contactless payment by Girocard is expected to rise to 50 euros.

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Oil price collapse also pushes the Dax down

Dax curve

View of the Dax curve in the Frankfurt trading hall.


(Photo: dpa)

Dusseldorf The German stock market cannot escape yesterday’s drop in the price of oil. The DAX is down 2.3 percent in the morning trade at 10,435 points.

The topic on the markets is the oil price collapse on Monday evening, which occurred in Germany after the market closed. In the United States, the price of oil plummeted for the first time in its history due to the coronavirus pandemic. Sellers had to pay money for someone to take their oil: The price of the futures contract for the US variety WTI for May plummeted Monday by almost $ 56 to minus $ 37.63 a barrel (159 liters).

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