Chairman of the Financial Services Authority (OJK) Wimboh Santoso confirmed the program extension credit restructuring as stated in OJK Regulation number 11 of 2020. Installment postponement policy credit From the start, the community was designed to be extended if needed.
“It does need to be extended, please if there are customers who are due if they really want to be restructured, just restructured and still valid until February 2021. In fact, there may be more extensions than that,” he said, speaking in a statement. webinar Capital Market Summit Expo, Monday (19/10).
Total restructuring in financing institutions (multi) until October 13, 2020, it was recorded at IDR 175.21 trillion. The good news is that the number of applications for restructuring has begun to decrease compared to previous months.
This figure consists of 4.73 million debtors in 181 multi. The details, MSME and Online Ojek (Ojol) players are 651 thousand debtors and non-UMKM and Ojol 4.08 million debtors. There were also 4,507 debtors whose data were not yet clear and clean.
“In this financing institution the amount has reached Rp. 175.21 trillion. Recently, there have been additional restructuring flat (flat), so it seems magnitudeit is optimal, “he said.
Meanwhile in banking sector, the realization of credit restructuring as of September 28 reached Rp904.3 trillion, consisting of 7.5 million customers spread across 100 banks. The details are 5.82 million MSME debtors and 1.64 million non-UMKM debtors.
Even so, Wimboh said banking liquidity in Indonesia was maintained due to policy synergy between regulators. For example, a reduction in BI interest rates and Minimum Statutory Reserves (GWM). “The government is also making aggressive spending which has become Law No. 2/2020,” he added.
Furthermore, he said various records and indicators show that Indonesia’s financial sector is quite resistant to economic pressures due to Covid-19.
Financial sector statistics show that liquidity has increased, with third party funds (DPK) recorded up 12.88 percent. Non-performing loans (NPL /non performing loan) gross per September was recorded at 3.15 percent and net NPL at 1.07 percent.
Then, LDR (loan to deposit ratio) as of August it was recorded at 83.16 percent and the CAR (capital adequacy ratio) of banks in the same period was 23.16 percent.
“However, we can provide a note, this resilience is certainly very sustainable in the future, it really depends on how long we can handle Covid-19,” he concluded.
They wanted to earn themselves, to exist as independent units, so they survived. As the former royal couple collected a fat package from Netflix, Charles (71) decided that his financial support was no longer needed. Not a penny will come from the kingdom anymore.
It took a while, but in the end they achieved what they proclaimed from the beginning. Namely, that they feed themselves. Thanks to a billion-dollar streaming business, an astronomical sum landed in their lap. Finally, they can relieve Prince Charles, who has so far had their livelihood on his shoulders.
Meghan Markel on pressure in the royal family:
To truly demonstrate responsibility and self-sufficiency, to Meghan and Harry the British public also urged. After signing a lucrative contract with Netflix, she immediately began to demand that they pay for the costly renovation of Frogmore Cottage. Let them honor them that they did it soon after. According to the Blesk.cz website, they were to return 2.4 million pounds (approximately 70 million crowns) to the budget of the royal family.
He Bank of Spain has found that Spanish companies have turned to the fixed income markets after the initial tightening of access conditions when the pandemic broke out, but they still do so in less than in the past, especially in the case of those that operate in the sectors most affected by the Covid-19 crisis.
This is indicated in the box ‘The Spanish corporate debt market during the Covid-19 crisis’, which will be part of the quarterly report of the Spanish economy for the third quarter of 2020. The initial tightening of conditions for access to fixed income markets of Spanish non-financial companies was produced by the lower predisposition of investors to invest in this type of assets in a context of growing concern about default risks, being more pronounced in the segment of high yield bonds, which includes the issues of companies with poorer credit quality, than in the investment grade, with a better credit quality.
In the months that followed, financing costs tended to decrease gradually, favored by the rapid action of the economic authorities, which favored an increase in emissions. However, the Bank of Spain has pointed out that the financing obtained by companies in these markets in the months that have elapsed since the outbreak of the health crisis it is something inferior to pre-pandemic levels.
Thus, in mid-August financing costs were still around 25 basis points above previous levels for bonds rated investment grade and 300 basis points for bonds in the high yield category.
Besides, the credit rating of the living safe of these emissions has been slightly deteriorated. The downgrades in the ratings have affected 9.4% of the outstanding balance. Of this variation, 5.6 percentage points correspond to downward revisions within the investment grade category (BBB- or higher), 2.8 percentage points to falls within the high yield category and 1 percentage point has meant downgrade from investment grade to high yield.
After the changes, the bulk of the outstanding balance is still maintaining in the investment grade categoryn (80%, 1 point less than before the pandemic), although the weight of the two categories closest to the high-performance group (BBB and BBB-) has risen 5 points, to represent 64% of the total a end of July.
The Bank of Spain explains this increase by the company rating downgrades that operate in the sectors least affected by the pandemic, since among the companies that operate in the most affected branches, the downgrades have been concentrated in stocks that before the start of the health crisis were already in the high-yield category .
Taking into account also the recently observed strong rebound in bank credit aimed at non-financial companies, the Bank of Spain considers that, although recourse to fixed income markets would have continued to contribute to the coverage of the financing needs of Spanish companiesIt would have done so to a lesser extent than in the past, especially in the case of those that operate in the sectors most affected by the pandemic.
BBVA has already mobilized more than 40,000 million euros in sustainable finance and against climate change after two and a half years after launching its ‘Commitment 2025’, by which the entity committed to mobilize 100,000 million euros between 2018 and 2025,
As reported in a statement, the bank chaired by Carlos Torres reached 40% of the 100 billion committed in June, a figure that includes operations in ‘green’ financing (62% of the total), financial inclusion and entrepreneurship (13%) , sustainable infrastructure and ‘agribusiness’ (11%) and other sustainable mobilization (14%).
The ‘Commitment 2025’ is based on three lines of action: financing to help curb climate change and achieve compliance with the Sustainable Development Goals (SDG) through the mobilization of 100,000 million euros between 2018 and 2025, integrating risks environmental and social issues associated with the bank’s activity to minimize the potential direct and indirect negative impacts and involve all stakeholders to collectively promote the contribution of the financial sector to sustainable development.
Regarding sustainable loans, in 2019 the bank granted 10,176 million euros, to which another 6,309 million have been added in the first half of 2020, adding a total of 23,904 million mobilized since 2018. These loans include ‘green’ finalist loans certificates, loans linked to environmental and social indicators and loans linked to the client’s ESG rating and corporate financing.
Likewise, the bank financed sustainable projects for 1,142 million euros in 2019, mainly in the renewable energy sector, and another 479 million in the first half of 2020, reaching a cumulative volume since 2018 of 2,443 million euros. During the first half of 2020, BBVA has participated in 11 new origination operations to finance sustainable projects, for a total amount of 5.4 billion euros.
In the social sphere, the entity has been particularly active in financing telecommunications projects, having participated as the leading bank in three operations in this sector in the last six months.
Regarding bonds, in 2019 BBVA participated in 30 issues as coordinator that entailed the placement of 23,198 million euros in total, with a share of 3,383 million euros. In 2020, this quota has been increased by 2,056 million euros.
Regarding the mobilization in inclusion and entrepreneurship, BBVA has reached 5,189 million euros from 2018 until the first half of 2020.
BBVA believes that financial institutions have to incorporate the risks and opportunities of climate change in their investment and financing decisions. Its aspiration is that all its products have their corresponding sustainable alternative solution, both for large companies and institutions, as well as for SMEs and private clients in 2020 in Spain.
Reporter: Maizal Walfajri | Editor: Herlina Kartika Dewi
KONTAN.CO.ID – JAKARTA. The impact of Covid-19 on the finance company industry business has suppressed the performance of finance companies. Financial Services Authority (OJK) data even records multi-finance receivables fell 7.3% year on year (yoy) to IDR 413.25 trillion until June 2020.
Head of the OJK 2B IKNB Supervision Department, Bambang W. Budiawan, explained that until May 2020 the assets of finance companies had decreased by 1.42% yoy to Rp 507.11 trillion. This is because financing receivables decreased by 6.38% yoy to IDR 420.25 trillion during the first five months of this year.
“Sources of funding for finance companies from domestic and foreign loans and bonds amounted to Rp 342.87 trillion or decreased by 3.93% yoy. Meanwhile, assets under management amounted to Rp 667.96 trillion or a decrease of 2.15%. Profits in May 2020 amounted to Rp2.66 trillion or decreased by 64.64% yoy, “said Bambang via video conference, Wednesday (12/8).
Chairman of the Indonesian Financial Services Association (AAPI), Suwandi Wiratno, stated that the impact of Covid-19 has forced financing companies to restructure. OJK noted that as of Tuesday (11/8), 182 finance companies had received restructuring requests of 4.82 million contracts.
The total sales reached Rp. 150.43 trillion with an interest of Rp. 38.03 trillion. Of this total, 4.18 million contracts have been restructured with a total outstanding principal of Rp 124.34 trillion and interest of Rp 31.73 trillion.
“The impact of difficulties in collecting installments from debtors is due to the impact of Covid-19 and the local government’s prohibition of other financing companies. In addition, finance companies must continue to pay debt installments to banks, but the amount of financing restructuring from customers is also large, “added Suwandi.
In fact, he admitted that new financing has decreased due to the decline in people’s purchasing power. On the other hand, now the liquidity of finance companies is getting tighter. This makes the financing ratio problematic or non performing financing (NPF) increases as the debtor’s ability to repay.
“The industrial BOPO in May 2020 rose 12.06% yoy to 91.35%. While gearing ratio industry in May 2020 amounted to 2.61 or decreased 24.05% yoy. The industry’s gross NPF rose 1.38% yoy to 4.11% and the industry’s net NPF of 0.81%, “explained Bambang.
Bambang further stated that there was also pressure on various financial ratios of finance companies. For example return on asset (ROA) industry in May 2020 fell 2.75% yoy to 1.98%. While return on equity (ROE) industry in May 2020 was 4.75% or decreased by 9.85% YoY.
“Currently, the gross NPF is high, even higher than that of banks. But I am sure, finance company friends have made backups. Like it or not, because the auditor will ask. Even PSAK 71 will still be carried out so that the provision will increase which will erode the profit of each financing company, “concluded Suwandi.
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Reporter: Maizal Walfajri Editor: Herlina Kartika Dewi
A monstrous maneuver. Measures to be calibrated well to avoid delays (and controversy). Thrusts of the various souls of the majority to be contained and brought to synthesis. But also the expectation of a new easing of EU rules on state aid for refreshment and direct public interventions on businesses. In the end, the “April decree” slips in early May, early next week, assures Economy Minister Roberto Gualtieri, given that the new EU framework is “imminent”. In any case, the government still needs some time to fine-tune the details of an “imposing” intervention, never seen “since the post-war period” but “necessary” to shore up the country experienced by the Coronavirus epidemic for two months, as the minister repeated. In fact, this is a maxi-maneuver of 155 billion, which is unprecedented even in the toughest years of the financial crisis from 2008 onwards: in Parliament the request for deviation from the 55 billion deficit is also supported by the opposition, while on the overall picture of the Def take the distinctions, Lega in the lead, waiting to see how the government will cope with Phase 2, on which, however, the Prime Minister, Giuseppe Conte, will present himself in the Chambers to defend the choices made so far including the use of the Dpcm.
Everyone, however, is now waiting for the measures, which the minister guarantees will take into account “as much as possible” the requests of the chambers and the proposals of the parties. For sure there will be new funding for health, research and civil protection, and a new full-bodied package for businesses and shock absorbers. Cig and cash in derogation will be refinanced with 13 billion for another 9 weeks, which can be used until the end of the year, as clarified by the Minister of Labor Nunzia Catalfo. Also confirmed the extension of Naspi for another two months, for those who have the check expiring, and the stop to layoffs. To accompany Phase 2 there will be more funds for companies that have to sanitize the rooms and the VAT on the masks will be reset to zero, then move to the subsidized rate of 5% starting from next year. And there will also be a 200-euro card to buy bikes, including electric bikes, scooters, or to spend on car sharing services and the like in big cities, to try to decongest public transport and avoid rush-hour increases in risk contagion from Covid.
And there will be a business package, from 50 billion to Cdp to enter companies in crisis to 5 billion from the ‘National Solidarity Fund’ to recapitalize SMEs, up to € 5 thousand non-refundable refreshment for micro enterprises (a provision is expected to 8 billion). The mechanisms for the direct intervention of the State will be calibrated on the new rules that Brussels will dictate “with the imminent launch – explained Gualtieri – of a new version of the temporary framework dedicated exactly to defining modalities and thresholds and characteristics of direct financing, capital or fund. lost to businesses. ” But even other measures have not yet taken a definitive form. The bonus for self-employed workers, for example, will rise to 800 euros but an income ceiling is assumed for at least the third month (the second should arrive automatically, with a click in 24 hours from the go-ahead to the decree). It is possible that the model adopted by the professional coffers is replicated, limits to 35 thousand or 50 thousand euros of income based on the damages suffered. But a decision has not yet been made and will go hand in hand with the decline in refreshment points for the most damaged SMEs. Doubts would still exist on the tourism package, in particular on the effectiveness of the holiday bonus (the hypothesis is from 500 euros). And still the problem of services for children at home from school is not dissolved (think of summer centers and to allow the use of the babysitter bonus to cover expenses) nor that of the new Emergency Income for those who have no other income and receives no subsidy. Pd and Iv would like the mayors to manage it (who have come forward and are already paying vouchers to families in difficulty) while the 5S are pushing to leave the management of the new tool to INPS. Another chapter to be resolved is that of the yard-unlocking measures: a first part of measures could enter directly into this decree, which in any case aims to close as soon as possible. While the bulk, including “the identification of 29 priority works” for which to appoint a commissioner, should come with the subsequent simplification decree, expected, said Minister Paola De Micheli, “in the first decade of May”.
Hamburg, Berlin The announcement on April 1, of all things, sparked euphoria among start-up lobbyists in Berlin: finance minister Olaf Scholz (SPD) announced a two-billion-euro protective shield especially for emerging tech companies. The efforts to convince the German Startups Association, which was newly formed a few months ago, had obviously borne fruit.
But now the founding lobbyists are worried about the implementation. The association now wants to put pressure on the media again.
“We have just received confirmation that the two billion euros will not be released in the Ministry of Finance. We have therefore already decided to escalate today, to send a letter to Scholz and at the same time to start a small media campaign to increase the pressure, ”says an internal WhatsApp message with which lobbyists will get signatures on Thursday wanted to. The news is available to the Handelsblatt.
Since the beginning of the corona crisis, the start-up association around its boss Christian Miele from venture capitalist Eventures has repeatedly publicly promoted a wide range of help for the industry – including in an online press conference together with the digital representative of the federal government, Thomas Jarzombek (CDU). Now the open letter should increase the pressure.
In the letter to Scholz, the association firstly wants to praise the finance minister for “recognizing the specific needs of startups”. Now the rapid use of the “promised customized instruments is required”.
The letter ends in the appeal: “Keep your word, Minister Scholz! Release the two billion euros! ”Upon request, the association confirmed the existence of the letter, which now has 500 signatories and is expected to be published at the weekend.
“While the other auxiliary instruments have already been focused, there is still no timetable for the start-up measures,” said Christoph Stresing, managing director of the Federal Association of German Startups (BVDS). “Speed is now the order of the day.”
Industry should also take risks
There are obviously good reasons for the hesitant implementation. The federal government is looking for a way to deal with the special situation of the industry. After all, the early-stage investors, who are particularly strong in the German scene, calculate their investments with failure rates of around 80 percent even in normal times. That is why the Federal Ministry of Finance wants to prevent those founders whose business idea is not viable anyway from being supported.
“The topic is complex, because we are talking about support for start-ups about equity financing, which is more likely to default than normal loan financing,” said State Secretary Jörg Kukies on Friday.
So far, the industry has preferred so-called matching. The state should increase funding rounds from venture capitalists. This is how the industry should take risks.
“We want to protect start-ups, not venture capitalists. Therefore, a promotional measure makes sense in which the venture capitalists refill their own money, which is then replenished by the state, ”said the founder of the venture capitalist Lakestar, Klaus Hommels, this week’s Handelsblatt.
However, critics doubt the selfless intentions of venture capitalists. “Why should venture capitalists be the gatekeepers for state aid?” Asks Sven Schmidt, co-founder of Hamburg investor ICS and critic of the industry. Start-ups that are financed without venture capital threaten to be excluded. In addition, the large venture capitalists in particular had earned very well in the past boom years and should not immediately ask for state aid, Schmidt criticizes.
However, the federal government expects the billion dollar umbrella to start soon. “I am confident that we can get the aid on the way quickly. We are in close and constructive exchange with the representatives of the industry to develop a viable concept, “said State Secretary Kukies.
More: Start-up investor Klaus Hommels criticizes state aid for Tui and Adidas
The bankruptcy of the former ZDF “dream ship” had caused a lot of fuss.
Berlin Unlike bonds from the USA and Germany, SME bonds have not only been considered a risky investment since the corona crisis. The extensive standstill of the economy further exacerbates the financing situation of medium-sized companies. “The bottom line is that small investors have to be prepared for defaults,” says Hans-Werner Grunow, managing director of management consultancy Capmarcon, which specializes in corporate finance.
Nobody can yet estimate the damage caused by the corona crisis. The VW group is already calling for purchase premiums for new cars, flanked by unions and those prime ministers who are concerned about the well-being of the key industry in their country. Those who are in short-time work and fear for their job will probably not buy a car for the time being.
The loss of production and sales weighs heavily. Now the corporations face a second problem. There are billions of leasing and loan contracts on the balance sheets of the German auto industry, which come under pressure as the crisis grows. Daimler alone had to spend 400 million euros in risk provisioning for the possibly bursting financing this quarter. If things go badly, then we see the tip of an iceberg here.
Almost every second car that automakers sell is financed, mostly by the company’s own banks. This makes the auto industry a key component of the global debt economy, especially in the United States. Nowhere else is more pumped up than in the country of seemingly unlimited credit options.
Americans don’t save on a car, they sign a lease that is paid at the end of the month from current income. Unlike in Europe, manufacturers generally also assume the residual value risk if the car is resold at the end of the lease term.
In the past ten years, thanks to low interest rates, this has been good business. The car companies financed a car for the consumer and enjoyed a well-calculated cash flow each month. For many customers, a small car became an SUV. So not only ford, Toyota and GM increased their sales but also Daimler, BMW and the VW group.
Faster crash than in the financial crisis
At the end of 2019, the credit volume for car purchases rose to $ 1.3 trillion, which is the same as before the financial crisis in 2008. But as long as the labor market worked and borrowers and lessees were able to stutter their rates, things turned this wheel faster and faster. This is now over for many people. Since the outbreak of the corona crisis, 26 million Americans have registered as unemployed – a faster and deeper crash than in the financial crisis a decade ago.
If these people don’t find work again soon, the auto industry will be hit twice. In addition to the broken credit agreements, the automakers then remain on the used cars, which their customers are placing in ever increasing numbers on the yard. At BMW, the memories of the last burst bubble are still painful. In the financial crisis, the group had to write down around two billion euros on loan defaults and lease returns on the US market. How carefully the corporations calculated this time is open.
While the credit-financed US market threatens to collapse like a house of cards, China shines all the brighter. The giant empire has replaced the USA as the world’s largest sales market in the past ten years. The fact that the corona crisis is over for the time being in the Far East is making some car managers sleep better. The Chinese market has already almost reached the old level again. And unlike most Americans, the Chinese largely pay for their cars in cash.
If the credit bubble bursts in the United States, the market there will remain on the ground for a long time. This does not apply to China. In the shutdown of the past few weeks, the German auto industry has continued to run its component factories in Germany in order to supply parts to the factories in China. When VW, Daimler and BMW build cars again in their German factories, some of them go straight to the Far East.
And the US factories of the Germans are also supposed to start producing again because the mass of the off-road vehicles built there is shipped straight to Shanghai and Beijing.
Crises shift forces. Even before Corona, business in China was very lucrative for the auto industry, also because foreign automakers are increasingly relieved of the obligation to work in joint ventures with a Chinese partner.
With BMW, the majority takeover has already been approved for the first car company. Daimler and the VW group want to follow suit today rather than tomorrow and increase their production in the Far East. That will now accelerate. The industry will mainly collect car keys on the US market in the coming months, but cash in China.
More: Daimler suffers a sharp drop in profits due to the corona crisis.
Hamburg Venture capitalist Klaus Hommels criticizes government aid for listed companies such as Tui and Adidas. The state subsidized the corporations “with a loan, although they could simply make a capital increase, in which the mostly foreign existing investors would have to invest,” he told the Handelsblatt. “We protect foreign investors in listed companies. This is where money comes in without old investors reinvesting. “
Hommels supports the European start-up lobby United Tech of Europe. “We want to protect start-ups, not venture capitalists. Therefore, a promotional measure makes sense in which the venture capitalists refill their own money, which is then replenished by the state, ”said the founder of the venture capitalist Lakestar.
But not all young companies could survive: “I think some startups will die that were only kept artificially alive anyway. For this you concentrate on the promising ones. If the government increases such rounds, even more money could flow into better projects in the crisis. ”
Hommels calls for government co-investments in collaboration with the industry. “Therefore, we also need a relevant advocacy group in Brussels with its own ethics, which in itself ensures that no free riders appear,” he said. However, individual European venture capitalists tried to take advantage of the situation. “Some are behaving impossible. We want to counteract this at the association level. It is not about winning the crisis, ”said the 53-year-old.
He sees the crisis as an opportunity for founders to concentrate on real problems. This could help Europe to become more independent of the United States in critical infrastructure. “We cannot rely on Americans for all system-related things. Think about it: The Americans could turn off the credit card infrastructure for us at any time, ”warns Hommels.
“Wouldn’t the biotech company Curevac be from Germans like that? SAP-Funded with founder Dietmar Hopp, the Americans would have snatched this vaccine developer out of our hands. This is a realization that is finally pervading: We have to finance our economy ourselves. ”
Read the entire interview here:
Mr. Hommels, have you postponed or canceled investment rounds yourself because of the crisis? The most important rule for me is: A promise, also verbally, has to be kept. This is a cultural asset because we come from the land of good merchants. We continue to look at new opportunities as normal.
There is no hesitation? Well, a no-go is when founders arrive with documents from pre-crisis times that they have not adapted to the new times. In addition, there is now a screening process for everyone: A few months ago, funding was less critical. Now there is a harder selection.
Is it bad? On the contrary: that brings clarity. This is always the case in difficult times. In the financial crisis, for example, some of today’s very big companies were built – like Zalando, Uber and Airbnb. Why? Because their ideas are based on real needs, which are much more obvious in tough times. More modest means are then sufficient for such ideas.
In your opinion, what are these real needs at the moment? The topic of helping – something like Nebenan.de. In addition, delivery services go through the roof. Above all, venture capitalists are given a new role. If the biotech company Curevac had not been financed by Germans like SAP co-founder Dietmar Hopp, the Americans would have snatched this vaccine developer out of our hands. This is a realization that is finally pervading: We have to finance our economy ourselves.
Do we not have to count on fewer rounds of financing from overseas simply because travel is currently hardly possible? On the other hand, the acceptance of video calls has increased. Before Corona, I would have said that you should have met in person first – that’s always better because you get a feel for whether it fits on a human level. In the meantime, however, it is totally accepted to only meet virtually.
Would you make a deal if you only knew people by video? Meanwhile yes.
They have brought together start-up associations from several European countries – probably also via video calls – and are calling for more coordination on the current rescue plans. Why? Many small associations are not heard in Brussels, so we have to speak with one voice there.
Isn’t your industry lobbying much better than in previous crises? In Germany in particular, start-ups were included in the rescue packages very early on. Yes that’s true. Through the start-up association, we led Christian Miele with Jörg Kukies, Secretary of State for Finance, Thomas Jarzombek, Digital Representative, and KfW Capital’s Chief, Dr. Jörg Goschin, ideas exchanged. The three do a great job in this difficult situation. However, aid for start-ups is basically not government programs, but is based on initiatives by individuals. Just like Kukies and Jarzombek in Germany, individual politicians are doing this in other European countries. As associations at European level, we want to provide you with an overview and contacts.
How do you start? First we put an overview of the respective national programs online. We don’t want to evaluate, we want to enable a comparison and exchange of ideas.
Why is it needed? We need it to prevent deadweight effects. Otherwise no politician can assess what the relevant demands are. That is why we also need a relevant advocacy group in Brussels with its own ethics, which in itself ensures that no free riders appear.
Do you see black sheep in the industry? Yes, there are also venture capitalists in Germany who no longer stick to existing, written financing commitments in the crisis. Some are behaving impossible. We want to counteract this at the association level. We are not concerned with being crisis winners. Therefore, the aid programs also take some time, because it is very complicated to prevent deadweight effects.
Nevertheless, there is criticism of state aid for start-up financiers. After all, there is already the word risk in the risk capital asset class – and every investor should expect to lose his entire stake. At first glance this is understandable, but actually pure polemic. Have a look who really should receive billions of state aid: the listed companies Adidas and Tui. But there are hardly any German shareholders behind it. The state supports this with a loan, although they could simply make a capital increase, in which the mostly foreign existing investors would have to invest. In the case of listed companies, we protect foreign investors. This is where money comes in without old investors reinvesting. However, we want to protect start-ups, not venture capitalists. Therefore, a promotional measure makes sense, in which the venture capitalists refill their own money, which is then replenished by the state.
Couldn’t venture capitalists simply inject enough own money, which is still available in most funds? We plan with different scenarios when we finance start-ups. A reserve is always calculated. But such a lockdown case, in which sales are zero for months, is of course not factored in, so we technically don’t have the money at our disposal. The start-ups therefore need state aid in order to survive a break of several months unscathed – for this special situation alone.
Doesn’t that help you as a venture capitalist? No, it’s about the survival of innovative start-ups. I myself could just sit back and relax. But we go in full, help the companies, do 1000 things. We are even considering helping KfW Capital with personnel. It’s actually nice that we can now do something together with colleagues like Holtzbrinck Ventures and Eventures. It is a clean event.
They have long advocated that European start-ups should be less dependent on money from the United States and Asia. Do you think that the renationalization tendencies in the corona crisis, for example with closed borders, bring the topic more into the general consciousness? Yes, because we are now seeing what such a sell-out means: If we could not independently support start-ups in Europe, America could have stolen the German vaccine invention from Curevac. This concerns us all and certainly contributes to the general awareness of the need for action.
The Americans deny that. And wouldn’t that be an exception that occurs every 100 years anyway? No, that also applies to artificial intelligence, climate issues and many other systemically relevant fields. Do we want to fight the pandemic of movement data from Google and Apple be dependent? We cannot rely on Americans for all system-related matters. Think about it: The Americans could turn off the credit card infrastructure for us at any time.
Does the crisis raise awareness of this? If we do nothing there, we cannot act autonomously and become technically dependent. That mustn’t happen.
The idea of economic self-sufficiency has long since been a thing of the past in times of globalization, and many corporations operate globally without discrimination. Why should it be different in the start-up area? I am not concerned with start-ups, but with system-relevant infrastructures. However, these are also developed by start-ups.
The alternative would be an even stronger anchoring of free trade, so that national egotisms are excluded – for example a new edition of the failed transatlantic free trade agreement TTIP. I would have agreed with you when the President was still called Barack Obama. But at the moment, the politics of the Americans are not reliable.
Do you think that the crisis can lead to a stronger European response, for example in the area of start-up financing? In any case. There is now a chance to make the voice of start-ups audible in Brussels and explain what kind of regulation we need after the crisis.
How fast do you think the situation will return to normal? I can’t say that – at the moment everything depends on how quickly we get a vaccination.
Do you dare to predict how severe the slump will be?
I think some startups will die that were only kept artificially alive anyway. For this you concentrate on the promising ones. If the government increases such rounds, even more money could flow into better projects in the crisis.
Mr. Hommels, thank you for the interview.
More: Dependency on foreign donors is becoming a problem for start-ups