S&P downgrades Commerzbank’s credit rating

Deutsche Bank and Commerzbank

The rating agency warns of a significant deterioration in results.


(Photo: dpa)

Frankfurt The rating agency Standard & Poor’s (S&P) has given it a thumbs-up because of the economic impact of the corona crisis at Commerzbank, Deutsche Bank and other German financial institutions. At Commerzbank, S&P downgraded the credit rating by one grade to “BBB +”, the outlook remains “negative”, as the credit rating officers announced on Thursday.

At Deutsche Bank, S&P confirmed the rating of the creditworthiness with “BBB +”, but lowered the outlook to “negative” from “stable”. While the creditworthiness guards doubt that Commerzbank can implement its new strategy “Commerzbank 5.0”, including the planned sale of the Polish subsidiary mBank as planned, they see the restructuring of Deutsche Bank basically on track. Commerzbank and Deutsche Bank declined to comment.

With “BBB +” the credit ratings of the two largest German private banks are still three levels above the junk level. A negative outlook means that the credit rating is in danger of being lowered.

S&P warns that even if the economy begins to recover in the third quarter, all banks will see a significant deterioration in results, credit quality and, in some cases, capital resources. The risks that the economy will recover later and the situation will worsen are considerable.

At the Sparkassen-Finanzgruppe Hessen-Thüringen, which includes Landesbank Hessen-Thüringen (Helaba), S&P confirmed the credit rating with “A”, but lowered the outlook to “negative” from “stable” due to the corona crisis.

At the leasing provider Grenke The rating with “BBB +” also remained stable, here too the outlook was reduced to “negative” from “stable”. At Deutsche Pfandbriefbank (pbb), S&P left both the credit rating “A-” and the outlook “negative”.

More: False incentives, fraud, debts – the side effects of the corona crisis.

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Bad Bank FMS doubles profit

Munich Dealing with the financial market crisis can still make money around a decade later. Last year, FMS Wertmanagement generated an annual surplus of EUR 236 million, more than twice as much as in 2018. The sale of hybrid capital bonds by the Irish subsidiary Depfa and a high dividend payment from a British subsidiary led to the gratifying result.

The Federal Government founded FMS Wertmanagement in 2010 in order to solve its biggest problem from times of the financial crisis in 2008 and 2009. The real estate financier Hypo Real Estate (HRE), which had even made it among the top 30 German companies in the Dax at that time, had started to roll.

A business model based on long-term financing in the real estate sector was responsible, but was only refinanced in the short term. When If the HRE threatened to run out, the state stepped in and ensured the orderly liquidation of the huge stock of securities via the newly founded FMS.

Of the approximately 175 billion euros with which the Munich-based settlement agency started in 2010, 69.3 billion euros were still in the portfolio at the end of last year. The company, which still has a total of 500 employees, announced on Tuesday.

Unusual: The portfolio increased slightly in 2019 compared to 2018. This was due to assets acquired by companies of the Irish subsidiary Depfa. On the other hand, the appreciation of the pound and dollar led to an increase in the nominal value of the euro-based portfolio. This resulted in a currency gain for FMS.

However, inventories of around five billion euros were also reduced. “2019 was a very successful year,” said the new CEO, Christoph Müller. He had taken over the management position last year when his predecessor Stephan Winkelmeier changed to BayernLB’s chairmanship.

Further figures illustrate how complex the complete liquidation of the huge securities portfolio from the portfolio of the scandal bank HRE is. Of the once 66 countries worldwide where the resolution agency had papers, 42 are still left after ten years of work.

“These are often products that were launched before the financial crisis and that no longer exist in this form today,” explains the new board member Carola Falkner. Almost three quarters now come from Great Britain, Italy and the USA. Almost half of the papers have terms that end between 2030 and 2040. Some complex financing goes beyond 2060.

Project “Next” started

However, FMS ‘business model from a shrinking portfolio paired with a high level of specialty should inevitably lead to red numbers for the processor in the coming years.

General administrative expenses were reduced by around four percent in 2019, but the total was still € 138 million. Management believes that the high costs will remain in the coming years, even if the shrinking portfolio’s profits are likely to decline.

That is why they started the “Next” project last year. The goal is to restructure the portfolio by 2025 so that it can be continued elsewhere and FMS Wertmanagement can be dissolved.

A lot will depend on the further effects of the corona crisis. Possible failures or deferrals of interest payments on certain papers are already becoming apparent. The sale of the Irish subsidiary Depfa planned for this year, which was already well advanced with the help of the British Barclays Bank, is currently stalling.

CEO Müller left it open whether a model like FMS Wertmanagement would also fit the current crisis: “The bad bank concept worked very well after the financial crisis in Germany. Whether it is a model at European level has to be assessed in individual cases “.

More: The ECB thinks about the time after the corona rise and works on a bad bank.

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ECB is working on a bad bank

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

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

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

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

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

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

Early discussion

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

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

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

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

Memory of the financial crisis

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

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

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

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

More: Why a bad bank is a good concept

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KfW chief Bräunig prefers to work in the background

Frankfurt KfW CEO Günther Bräunig knows his way around crises. During the financial crisis, the 64-year-old bank manager jumped as an interim boss at the Mittelstandsbank IKB when the then KfW subsidiary threatened to collapse in the summer of 2007 under the burden of worthless US mortgage papers. And he still heads the supervisory board of the Pfandbriefbank, which was created from the remains of Hypo Real Estate, which was nationalized at the time.

The crisis expertise of Bräunig and KfW has been in greater demand than ever since the outbreak of the corona pandemic. The development bank’s cheap aid loans, for which the state is largely liable, are an important component of the federal government’s efforts to combat the economic consequences of the corona crisis. The state development bank steps in where banks and savings banks shy away from new loans.

9728 applications have been submitted to KfW by Tuesday, the loan volume is 22.9 billion euros. At KfW, Bräunig subordinated everything to coping with the flood of applications, “because the whole Republic will see how fast and effective we will be,” he said in a video message to the employees at the start of the programs.

The recognition of Bräunig is great in the financial scene. He is a “very accessible and knowledgeable banker with whom you enjoy working,” said the corporate client manager of a large German bank.

The assessments in Berlin sound very similar. “In the corona crisis, Günther Bräunig proves himself to be an accomplished and pragmatic crisis manager, with whom I exchange ideas non-stop,” said State Secretary in the Federal Ministry of Finance, Jörg Kukies, the Handelsblatt.

“He is fully committed day and night so that we can achieve our common goal of guiding Germany through this crisis well.” The KfW boss made a decisive contribution to this.

Praise from the Federal President

Federal President Frank-Walter Steinmeier (SPD) has also contacted Bräunig and thanked the state development bank for its commitment. He “expressed his respect for the responsibility that now lies on our shoulders with the assumption of Corona aid for the German economy”, Bräunig wrote to KfW employees at the end of March.

This is a lot of praise for a person who is actually not in the spotlight. For a good two years now, Bräunig has been the third largest German bank in terms of total assets. Few employees know the institute as well as the person from Wiesbaden, who spent almost his entire professional life at the development bank.

But when Bräunig moved up to the top in January 2018, he refrained from making the big appearance. When asked at his first press appearance as KfW boss which fragrance brands he wanted to set at the state development bank during his term in office, he decided: “In my opinion, there is no need for your own signature.” at most he wants to set new accents.

Braunig prefers to work in the background. Public spikes against the government are not known. This differentiates him from his predecessor Ulrich Schröder. One senses that Bräunig is not comfortable with everything that is decided in Berlin, rather than being heard by him.

This applies, for example, to the state’s 100 percent liability for KfW quick loans. Prior to this, Bräunig had emphasized that he considers it important that the banks also retain at least a small part of the liability for a loan.

But he made it clear that it was ultimately a political decision. When something is decided politically, Bräunig doesn’t sulk, but makes the best of it, says someone who knows him well.

This characteristic should contribute to the appreciation that he enjoys across all parties in Berlin. In the past, the political smell of the barn played an important role in filling the KfW main post. At least Braun’s political preferences are not on record. Nevertheless, he was the preferred candidate of both coalition partners in his freestyle.

More: Corona help: KfW eases conditions for fast credit

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Suspension of dividends for savings banks and Volksbanks

Sparkassen logo

In addition to the savings banks, the ECB is also demanding that the Volksbanks waive dividends.


(Photo: dpa)

Frankfurt Financial supervision has loosened the rules for banks significantly in the wake of the corona crisis. This should enable the institutes to support companies in this difficult time. However, the authorities want to prevent banks from using the additional scope to keep their shareholders on line with dividends.

The European banking regulator has therefore tightened its pace on this subject. On Friday evening, it asked the largest institutes in the euro zone not to pay dividends until at least October 1, 2020. The same applies to the buyback of own shares.

“With the recommendation, we want to prevent that in the current uncertain situation due to distributions, much needed capital may later flow out of the banking system,” Bundesbank board member Joachim Wuermeling told Handelsblatt. “However, this is not the case for payments between parent companies and subsidiaries within banking groups. That is why the recommendation does not extend to such transactions. ”The Munich-based HypoVereinsbank can therefore pay its Milan-based parent company UniCredit a dividend of EUR 3.29 billion as planned.

“The situation within groups is comparable, even if it is not legally a group,” said Wuermeling, who is responsible for banking supervision on the Bundesbank board.

Here too, a dividend payment remains “within the financial group of the savings banks or cooperatives” and thus in the banking system. “That’s why I don’t assume that distributions will be waived within alliances,” emphasized Wuermeling.

DZ Bank, fund provider Deka and individual Landesbanken are therefore likely to be able to pay dividends to their owners after a case-by-case assessment. DZ Bank belongs to the Volks- und Raiffeisenbanken, some of which have factored in the distribution of their central institution in their plans.

The same applies to the savings banks, to which Deka belongs 100 percent. The ownership structure of the Landesbanken is very different. The savings banks hold only 25 percent of BayernLB, but more than 80 percent of Helaba.

As in the previous year, Helaba plans to distribute 90 million euros to its owners for the 2019 financial year. “This corresponds to a payout ratio of less than 20 percent,” said CEO Herbert Hans Grüntker on Wednesday. “We believe that we are careful with our capital resources.”

DZ Bank plans to pay dividends to its owners totaling EUR 322 million. This corresponds to a payout ratio of around 17 percent.

“Basel IV” rules are postponed

In contrast to DZ Bank and Deka, German private banks like that Commerzbank, the Aareal Bank or the Deutsche Pfandbriefbank will probably have to suspend or cancel their planned dividend payments for 2019.

On the other hand, the institutes can look forward to further relief. International banking regulators announced on Friday that they will postpone the introduction of tougher capital requirements because of the corona crisis by a year. The set of rules, which is called “Basel IV” in the industry, should only be gradually introduced in 2023.

More: So far, almost everything has been about relieving companies of labor costs. Now relief is also being discussed in the cost of capital.

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Savings banks and Volksbanks can continue to receive dividends

Sparkassen logo

In addition to the savings banks, the ECB is also demanding that the Volksbanks waive dividends.


(Photo: dpa)

Frankfurt Financial supervision has loosened the rules for banks significantly in the wake of the corona crisis. This should enable the institutes to support companies in this difficult time. However, the authorities want to prevent banks from using the additional scope to keep their shareholders on line with dividends.

The European banking regulator has therefore tightened its pace on this subject. On Friday evening, it asked the largest institutes in the euro zone not to pay dividends until at least October 1, 2020. The same applies to the buyback of own shares.

“With the recommendation, we want to prevent that in the current uncertain situation due to distributions, much needed capital may later flow out of the banking system,” Bundesbank board member Joachim Wuermeling told Handelsblatt. “However, this is not the case for payments between parent companies and subsidiaries within banking groups. That is why the recommendation does not extend to such transactions. ”The Munich-based HypoVereinsbank can therefore pay its Milan-based parent company UniCredit a dividend of EUR 3.29 billion as planned.

“The situation within groups is comparable, even if it is not legally a group,” said Wuermeling, who is responsible for banking supervision on the Bundesbank board.

Here too, a dividend payment remains “within the financial group of the savings banks or cooperatives” and thus in the banking system. “That’s why I don’t assume that distributions will be waived within alliances,” emphasized Wuermeling.

DZ Bank, fund provider Deka and individual Landesbanken are therefore likely to be able to pay dividends to their owners after a case-by-case assessment. DZ Bank belongs to the Volks- und Raiffeisenbanken, some of which have factored in the distribution of their central institution in their plans.

The same applies to the savings banks, to which Deka belongs 100 percent. The ownership structure of the Landesbanken is very different. The savings banks hold only 25 percent of BayernLB, but more than 80 percent of Helaba.

As in the previous year, Helaba plans to distribute 90 million euros to its owners for the 2019 financial year. “This corresponds to a payout ratio of less than 20 percent,” said CEO Herbert Hans Grüntker on Wednesday. “We believe that we are careful with our capital resources.”

DZ Bank plans to pay dividends to its owners totaling EUR 322 million. This corresponds to a payout ratio of around 17 percent.

“Basel IV” rules are postponed

In contrast to DZ Bank and Deka, German private banks like that Commerzbank, the Aareal Bank or the Deutsche Pfandbriefbank will probably have to suspend or cancel their planned dividend payments for 2019.

On the other hand, the institutes can look forward to further relief. International banking regulators announced on Friday that they will postpone the introduction of tougher capital requirements because of the corona crisis by a year. The set of rules, which is called “Basel IV” in the industry, should only be gradually introduced in 2023.

More: So far, almost everything has been about relieving companies of labor costs. Now relief is also being discussed in the cost of capital.

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DZ Bank wants to pay despite dividend freeze

NNo German bank has responded to the request from the European banking regulator not to distribute dividends by October. Rather, according to information from the F.A.Z. As of Sunday, DZ Bank assumes that, as planned, it will pay 320 million of 1900 million euros in annual profit to its owners, around 800 Volksbanken and Raiffeisenbanken, as dividends. Because apparently the dividend stop should not apply to institutions that, like DZ and Deka, are wholly owned by other banks and savings banks. Deka will decide in the course of the coming week whether it will keep its distribution plans.

Hanno Mussler

Listed Aareal, Commerzbank and Deutsche Pfandbriefbank remained on Friday’s averages to responsibly review their dividend proposals for the upcoming general meetings in May and the payout dates immediately following. Apparently, the legal nature of the “recommendation” from the banking supervisory authority is not clear to many banks. After all, it is not a prohibition, but an expectation to be taken into account by the management, according to in-house lawyers. Spanish banks such as Santander, Caixa and Bankia, on the other hand, had already responded to initial demands from regulators last week and cut their dividends.

As the F.A.Z. reported, the European Central Bank asked European banks on Friday evening not to distribute a dividend for 2020 and – if not yet done – for 2019 to October. The Basel Committee at the Central Bank of Central Banks (BIS) also postponed the stricter capital requirements for banks (“Basel IV”) by one year to 2023. In return for this relief, the BIS on Sunday asked banks worldwide to stop share buybacks and dividends . The banks should therefore fully retain their profits and create additional reserves in order to continue lending in the Corona crisis and to be more resistant to loan defaults.

The Federal Association of Private Banks, which Commerzbank and Aareal belong to, considers this measure to be justifiable in the current crisis situation. However, CEO Christian Ossig emphasizes “that the prerequisite for banking supervision must be an exception”. Only the extraordinary plight of many companies justifies such an intervention in the autonomy of the banks. “In the interest of financial stability, the supervisory authority must make it clear that further interventions in the distribution policy of the institutes will not take place,” said Ossig. Otherwise it would be difficult for banks to find investors in the long term. This would affect the stability and performance of the financial sector. In this statement by the banking association, there is a noticeable concern that the advised dividend block on the capital market could be interpreted as a weakness in the banking sector.

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ECB calls on banks to suspend dividend payments

European Central Bank in Frankfurt

The discussion about dividend cuts has recently gained momentum.


(Photo: dpa)

Frankfurt In view of the virus pandemic, the ECB’s banking supervisory authorities are asking euro area banks to forego profit distributions. Banks should not pay dividends for 2019 and 2020 at least until October 1 of this year, the European Central Bank (ECB) said in Frankfurt on Friday. You should also not buy back shares. Rather, the institutes should use the money to support households and companies with loans in times of the virus crisis.

The ECB and other European supervisors have made various adjustments to the money houses in recent weeks. They allow banks to attack the buffers built up for economic crises so that the credit gates remain open. It would be difficult to understand if the institutes would instead use the leeway to distribute profits – especially since loan defaults could sooner or later hit the banks.

“Now is not the time for banks to flatter their shareholders or to maintain prices,” said Green MEP Sven Giegold and called on the German financial regulator Bafin to act. “The order from the ECB should give BaFin an opportunity to also issue a hard dividend freeze.”

Since autumn 2014, the ECB has been responsible for the control of large financial institutions in the euro area, including those Deutsche Bank and the Commerzbank. For the smaller banks, the ECB and national supervisors share this task.

The German Association of Private Banks BdB spoke of an “acceptable” measure by the ECB. “Banks have to support their customers in this extraordinary crisis,” said BdB general manager Christian Ossig. “This also means that the institutes handle their capital reserves responsibly.”

BdB: The default should be an exception

However, Ossig also emphasized that the prerequisite for banking supervision must be an exception that is only justified by the exceptional crisis. “In the interest of financial stability, the supervisory authority must make it clear that further interventions in the distribution policy of the institutions will not take place.” Otherwise it would be difficult for banks to find investors in the long term.

The Deutsche Pfandbriefbank, which announced at the beginning of March that it would distribute three quarters of its profits to shareholders, now wants to react quickly. “The Executive Board and the Supervisory Board will carefully review the ECB’s recommendation and take a decision at short notice,” a spokesman told Reuters.

Commerzbank, which actually wanted to pay a dividend of 15 cents per share for 2019, is also reviewing the profit distribution. “We take a close look at this and then make responsible decisions,” said a Commerzbank spokeswoman.

Also the Aareal Bank had already put a question mark behind their 2019 dividend. Deutsche Bank had already announced in July that it would not pay a dividend for 2019 and 2020 because of the costs of the corporate restructuring.

More: European banking association calls for dividend waiver for 2020

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How the federal government wants to save companies

Berlin It was an unusual Bundestag session on Wednesday morning. Only every third chair was allowed to be occupied by parliamentarians. The spaces in between had to remain free. President of the Bundestag Wolfgang Schäuble (CDU) asked the MPs to keep the necessary distance of 1.50 meters in the corona crisis in order not to infect anyone. “If there is not enough space in the hall, we have also created space in the visitors’ gallery.”

As many MPs as possible had traveled to Berlin for the meeting to ensure that the chancellor majority needed to adopt the crisis measures. However, the Bundestag stipulated for the future to be quorate even if only a quarter of the members are still present. “Parliamentary democracy will not be overridden,” said Schäuble. Parliament remains able to act.

It immediately demonstrated its ability to act. In the afternoon, the Bundestag hastily passed the billion dollar rescue packages for the economy. The Federal Council still has to agree on Friday.

“Hard weeks are ahead of us. We can cope with them if we show solidarity, ”Vice Chancellor Olaf Scholz (SPD) had previously advertised for the aid packages. Scholz spoke on behalf of Chancellor Angela Merkel, who is still in quarantine at home.

The measures would result in a supplementary budget of 156 billion euros – “a gigantic sum,” said Scholz. But this is necessary to mitigate the consequences of the crisis. In total, including sureties and discounted KfW loans, it is even about aid measures with a volume of 1.2 trillion euros.

Despite this huge sum, artisans, retailers and restaurateurs fear falling through the grate. Emergency aid is available for small companies with up to ten employees, and a new rescue fund (WSF) for large companies, which also grants direct grants as a supplement to KfW liquidity aid – provided the companies have at least 249 employees, 43 million euros in total assets and 50 million euros in sales .

Employer President Ingo Kramer praised the decisions: “What has now been launched is a huge and very targeted aid package,” he told the Handelsblatt.

The rescue package must also be accessible to companies, the associations of hotels, restaurants and caterers, Dehoga and IHA, the retail association HDE and the craft association ZDH demanded.

Fear of overwhelming the rescue package

“Many medium-sized companies with more than ten employees are at risk of falling through the network of federal support measures,” feared craft president Hans Peter Wollseifer. These companies also needed emergency aid, for example when pending wages or subsidizing rents.
Finance minister Scholz promised in the Bundestag that the government would do everything to mitigate the corona consequences. “There is no script for this.” If necessary, the government will decide on further measures. In concrete terms, Scholz already promised employers that he would have examinations made to make tax-free wages that they want to pay their employees in the crisis. That was what medium-sized companies had asked for.

graphic

In the Bundestag, however, other criticisms were initially in focus on Wednesday. A number of MPs were upset with the federal government. Around 15,000 companies are said to be able to slip under the rescue fund.

Union economic leaders fear that this large number could overwhelm the bailout fund – and lead to arbitrary decisions. Therefore, they particularly urged changes to the possibility of the rescue fund to nationalize companies in need. They demanded that the hurdles be raised so that the instrument could not be used indiscriminately.

However, the Ministry of Finance rejected all proposed changes. At 0.08 a.m. Tuesday night the house sent a large package with numerous changes to the law. “That is not possible, not even in these times,” said a CDU MP. “How are we supposed to go through the paperwork until the next morning’s resolution when we get it at midnight?”

Lambrecht for nationalization if necessary

The Federal Ministry of Finance is against criticism. “We have taken up many requests for changes, such as the desire of the federal states to put federal and state programs legally on an equal footing, or to include start-ups in the rescue package,” said the Ministry of Finance. However, one cannot take all wishes into account. And time is short.

Federal Minister of Justice Christine Lambrecht (SPD) also defended the rapid pace. “The current situation requires quick and decisive action,” the SPD politician told the Handelsblatt. She also spoke in favor of completely nationalizing companies if necessary.

“In the crisis, it is imperative that we protect our country’s economic structure and prevent major companies from being sold out or broken up,” said Lambrecht. “The state is ready to partially or wholly participate in companies if this should become necessary.”

However, the Bundestag was able to implement changes elsewhere. For example, companies that use state aid should not be allowed to pay dividends, bonuses or share packages to their top managers. The housekeepers are learning lessons from the financial crisis. At that time, board members of the real estate bank HRE had approved millions of bonuses despite the state’s rescue.

In addition, the Bundestag demands that the state sell shares in companies “at the latest after ten years”, “unless there are urgent economic reasons or reasons that are important for the German economy”, as it was stated in a bill.

“Against this background, the bonus lock for board members makes sense,” said one MP. “This is the biggest incentive for companies to get out of state participation as quickly as possible.” The Bundestag also assures itself of a say. Rescue measures of over 500 million euros are to be discussed in the Budget Committee.

Help without collateral deposited

Another new feature is that start-ups can slip under the protective shield. Up until shortly before the Bundestag session, the details were discussed. Result: All young companies are entitled to help, provided they are systemically relevant and can demonstrate goodwill of at least 50 million euros.

After the accelerated legislation, it is now a matter of publicizing many rescue measures. The statutory health insurance company points out a particularly important point in a circular: On request, companies in need can have the contributions for pension, health and unemployment insurance due for the months of March to May, so that they do not run into liquidity problems.

The employer does not have to offer any security for this, nor is deferred interest or late payments charged. However, the deferral option only applies if other government aid does not work. For example, the expansion of short-time working stipulates that companies are fully reimbursed by the state for the social contributions for lost hours.

More: What the Bundestag has decided in detail.

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