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
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.