Recovery in the oil market in the second half of the year

M“Oil market chaos” was the title of a conference call in which Eugen Weinberg, oil specialist at Commerzbank, wanted to bring business partners from all over the world closer to the extraordinary development on the American oil market on Thursday.

Christian Siedenbiedel

Negative prices on the oil market, that was a very special situation, was his message, which traders, stock exchanges and banks all over the world would have to adjust to – and which could lead to unforeseen difficulties. Nevertheless, Weinberg believes that by the end of the year everything will have calmed down somewhat and the oil price for the North Sea Brent will be back at $ 40 a barrel (barrel of 159 liters).

“The physical market participants or hedge funds were not primarily responsible for the turmoil surrounding the American oil price on Monday,” says Weinberg, “but above all partially automatic actions of the investment products for private investors and forced liquidations”. In the past two to three weeks, there have been large inflows into exchange-traded index funds (ETF), exchange-traded commodities (ETC) and certificates on oil from private investors.

Treacherous roll losses

Many of them would probably not have understood that, unlike the stock market, such securities on oil would not automatically benefit from the so-called roll losses if the oil price rose. “Where there is oil, there is not necessarily oil in it,” said Weinberg.

Oil on the futures market is traded with contracts that regulate the purchase of oil at a time. Securities for investors build on this. These contracts expire at some point and can then no longer be terminated. At least for the American West Texas Intermediate (WTI) grade, the contracts cannot then be paid out in cash, but the beneficiary must physically receive the oil.

Since the storage capacities in America are scarce and therefore expensive, nobody wanted that, and the price for the May contract continued to fall. The providers of investor securities on oil, in turn, “roll” these contracts, that is, they sell the expiring ones and buy the new ones. If oil is now much more expensive to trade in June than in May, as was the case at the beginning of the week, the providers of the securities will receive fewer new contracts for the proceeds from the old contracts – so the investor will not benefit, even though the oil price is recovering optically.

“The fact that the oil price has become negative for the first time has huge effects – even if you should not expect that in future, if you need money, you can simply drive to the petrol station instead of the ATM and get money for refueling there too,” said Weinberg.

Brent price also wobbles

He stated that the Brent price could also slide into the negative. “I think that is less likely for the futures market on Brent because, unlike WTI, contracts can also be paid out in cash,” said Weinberg: “But for the market for physical oil, it is quite possible that the physical prices sometimes become negative if the producer offers a large discount to the Brent oil price. ”Saudi Arabia, for example, offers its European customers a discount of more than $ 10 a barrel for May deliveries. Oil suppliers who have high transport costs are already paying part of the price.

“I expect the oil market to recover in the second half of the year,” said Weinberg. However, it is easier to predict what will happen in six months than what will happen in six minutes. He expects the Brent price to recover to $ 40 by the end of the year, but nothing more. “The price war could continue, and the large stocks are also well filled. “If production surpluses stop this year, around a billion barrels of oil in warehouses and oil tankers are likely to be brought back on the market.”

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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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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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Corona and the consequences: more care in real estate

When a major crisis shakes everyday life and the financial markets, people feel much like hearing that pickpockets are on the go: they instinctively feel for their wallet to make sure it is still there. Everyone who owns assets is currently doing the same.

Martin Hock

After all, the Germans seem to be certain of one type of property: real estate. 80 percent believe that this is still very stable in value, is the result of an online survey by the real estate crowdinvesting portal Exporo, for which 1,048 German citizens were surveyed.

Real estate investments were hit hard on the stock exchange alone. The prices of the large German real estate funds from the Sparkassen and Volksbanken, Deutsche and Commerzbank houses – they all fell by 10 to 20 percent within a few days in March, especially on the London Stock Exchange, where these fund shares are traded relatively briskly. In the meantime, however, the courses have made up for half to three quarters of their original fees.


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To detailed view

Apparently, investors got liquidity here too to cover losses incurred elsewhere. Real estate may even seem more attractive in a # StayAtHome society than before. However, experts doubt that the real estate industry can get away with it. The prices of real assets will also come under pressure, at least in the short term, is certain Chris Urwin, who heads the research department for real assets at Aviva, the institutional investor. The current crisis has a particularly negative impact on retail, hotel and leisure properties.

The hotel sector is most affected, writes Matthias Pink, managing director of the real estate service provider Savills. The occupancy rate is declining significantly and an early recovery is unlikely. A certain catch-up effect is to be expected, but insolvencies can also be expected with a significant drop in sales and without state support.

The office property market is also always very sensitive to economic fluctuations, says Sven Carstensen, office property expert from the Bulwiengesa analysis institute. He expects vacancies to increase, albeit at a moderate level. Co-working providers and companies in industry crises will be hit hard.

The responsible department head Heike Piasecki even assesses the situation as negative for nursing homes. There could be a decline in occupancy in the short to medium term; Insolvencies of small operators cannot be ruled out in the medium term.

Housing and logistics at an advantage

But there are also areas that are less affected or can even benefit. Bulwiengesa believes that the crisis can reverse the trend towards ad hoc production and that storage space requirements increase. This benefits logistics properties. The immediate effects for residential real estate are rather small, as long as the recession is rather sharp and short. The fluctuation could even decrease.

In some German real estate segments, this will exacerbate negative developments that have already emerged. The area of ​​project developments for retail and the hotel industry in the seven German A cities of Berlin, Hamburg, Munich, Frankfurt, Stuttgart, Dusseldorf and Cologne has already decreased significantly in the previous year. Above all, the construction of residential real estate is likely to decrease there, according to Bulwiengesa’s latest project developer study. But one should not conclude from this on the entire German housing market.

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Thousands of consumers are applying for credit deferrals

TConsumers in the corona crisis have asked for deferred payments for loans. According to the Sparkassen- und Giroverband (DSGV), the savings banks alone have so far suspended interest and principal payments from 80,000 borrowers. Since April 1, banks have had to pay consumers, who are in need because of the crisis, to pay interest, repayments or repay consumer and real estate loans for three months. The savings banks had introduced a goodwill arrangement a few days beforehand.

At Commerzbank, 1.5 percent of the total consumer credit portfolio has been deferred so far (as of April 6). The institute approves all applications for deferrals if they are made due to the corona crisis. Overall, the money house expects 10 to 20 percent of applications based on the total amount of consumer loans. According to their association BVR, the Volks- und Raiffeisenbank should also have received their first applications.

However, consumer defenders believe that deferral alone will not be enough. “Consumers also need a financial aid package that actually compensates for the losses they suffered as a result of the corona pandemic,” the Federal Association of Consumer Centers (vzbv) demands in a statement. Otherwise, the financial problems would resume after the deferral.

The bank customer must demonstrate that he has lost revenue due to the crisis and is therefore in an emergency, for example his maintenance is at risk. The deferral applies from April 1 to the end of June for consumer loans that were concluded before March 15.

According to consumer protection experts, the period until the end of June will still suffice. “It is foreseeable that consumers will continue to suffer from the pandemic and its consequences for a long time. They should therefore be protected longer than previously decided, ”warned the vzbv.

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Central bank can accept Greek government bonds

Dhe European Central Bank (ECB) has announced a new corona bailout program, which will, in particular, significantly relax the rules on collateral that banks deposit with the central bank for loans. According to the ECB, the pool of securities that can be used as collateral will be expanded to include Greek government bonds.

Christian Siedenbiedel

In addition, the haircuts on securities that are otherwise used for security reasons are applied less strictly. The central bank said it was ready to temporarily take more risks to mitigate the deterioration in financing conditions in the euro area and to ensure the supply of credit to the economy.

An important part of the crisis package

ECB Executive Board member Isabel Schnabel called the program via the short message service Twitter “another, very important part of our crisis package”. In a first analysis, the Bank of America judged that it was a “strong easing measure”. Commerzbank warned that the ECB’s new border crossing could result in large-scale legal disputes over the mandate’s borders. The financial markets reacted to the announcement by, among other things, lower risk premiums on Greek government bonds.

Specifically, the program contains a whole package of measures. In the future, Greek bonds can be deposited with the ECB as collateral for credit transactions, even if they are rated below the “investment grade” by the rating agencies, ie as “junk bonds”. The ECB calls this step a “waiver”, a special release. This should make it easier for Greek banks, which hold many such papers, to obtain loans from the ECB. In addition, it will also be easier to deposit credit claims than collateral in the future. The national central banks should be given more leeway here. Among other things, government-guaranteed loans to companies, the self-employed and households are to be accepted as collateral.

This enables the banks to use corona crisis loans to turn them into cash straight away. There could be a high failure rate here – then the states would be challenged again. Other new regulations are that banks can also use small loans below EUR 25,000 as collateral and can more easily use their own credit rating systems, and reporting requirements have been relaxed.

Furthermore, the haircuts on securities deposited with the ECB as collateral are now being temporarily reduced by 20 percent. The banks can therefore get more liquidity against collateral. In addition to this temporary easing, the haircuts for so-called “non-marketable” securities are to be reduced in the long term, which also reduces the haircuts for this type of security by 20 percent.

The ECB emphasizes that all steps are temporary except for the latter change. The Eurosystem committees are also to find ways to mitigate the negative effects in cases where the creditworthiness of a debtor is downgraded due to the crisis and his papers are therefore no longer accepted as collateral.

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Why many bankers still go to the office in Corona times


Empty desks on the Frankfurt Stock Exchange in March
Image: Wolfgang Eilmes

The regulator has relaxed the rules for accessing bank data from home. Nevertheless, there are bankers who still go to the office every day in the Corona crisis. Just why?

Dhe entire Frankfurt banking world has been working almost entirely in the home office for two weeks. All bankers? Not quite. A crowd of a few hundred Commerzbank securities dealers is resisting this trend and continues to go to the office almost every day. The dealers work not far from the city center on Mainzer Landstrasse in one of the largest dealer halls in Europe. Or – and this is due to the Corona crisis – they work in alternative accommodation in the Frankfurt area, which Commerzbank has to provide for such emergencies and which is empty in normal times. The trading team has therefore been divided in order to ensure that the other team can continue to operate even if one team suspects Corona. This is also a common practice elsewhere for mission-critical departments.

Hanno Mussler

However, Bafin’s financial supervision is particularly strict when it comes to securities trading. Bafin has actually severely restricted home office activities for retailers. “Commercial transactions outside of the business premises are only permitted if this is clearly regulated by the institute and every transaction is clearly documented. Organizational and technical problems can arise if trading activities are to be carried out at short notice and exceptionally outside the business premises, for example from the home office, ”says the minimum requirements for risk management (MaRisik).

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Working in corona times: securities trading in the home office


Empty desks on the Frankfurt Stock Exchange in March
Image: Wolfgang Eilmes

The regulator has relaxed the rules for accessing bank data from home. Nevertheless, there are bankers who still go to the office every day in the Corona crisis. Just why?

Dhe entire Frankfurt banking world has been working almost entirely in the home office for two weeks. All bankers? Not quite. A crowd of a few hundred Commerzbank securities dealers is resisting this trend and continues to go to the office almost every day. The dealers work not far from the city center on Mainzer Landstrasse in one of the largest dealer halls in Europe. Or – and this is due to the Corona crisis – they work in alternative accommodation in the Frankfurt area, which Commerzbank has to provide for such emergencies and which is empty in normal times. The trading team has therefore been divided in order to ensure that the other team can continue to operate even if one team suspects Corona. This is also a common practice elsewhere for mission-critical departments.

Hanno Mussler

However, Bafin’s financial supervision is particularly strict when it comes to securities trading. Bafin has actually severely restricted home office activities for retailers. “Commercial transactions outside of the business premises are only permitted if this is clearly regulated by the institute and every transaction is clearly documented. Organizational and technical problems can arise if trading activities are to be carried out at short notice and exceptionally outside the business premises, for example from the home office, ”says the minimum requirements for risk management (MaRisik).

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Trump is raising oil prices with a single tweet

EA single message from US President Donald Trump on the short news service Twitter caused oil prices to rise temporarily by more than 40 percent on late Thursday afternoon – but part of the profits were lost again during the night before the price fell again to a good 31 on Friday morning Dollars per barrel (159 liter barrel) for the North Sea Brent rose.

Winand von Petersdorff-Campen

Katharina Wagner

Katharina Wagner

Economic correspondent for Russia and the CIS, based in Moscow.

Christian Siedenbiedel

Already after the announcement by the American President Donald Trump on Thursday that he wanted to meet with representatives of the industry on Friday to talk about possible state aid, the oil had become significantly more expensive from its previously extremely low level.

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