In the Corona year 2020, the profits of Volksbanks and Raiffeisenbanks melted together. One reason: Significantly higher provision for possible loan defaults. But that’s not the group’s only concern.
After a good start in 2021, Germany’s cooperative banks are preparing for possible setbacks as a result of the corona pandemic.
Although the earnings situation of the institutes will probably stabilize in the course of the economic recovery, said Andreas Martin, board member of the Federal Association of German Volksbanks and Raiffeisenbanks (BVR), on Tuesday in Frankfurt. “At the same time, however, due to the recession of 2020 and the obligation to file for insolvency, which is no longer suspended, we can expect rising insolvency figures, which will be reflected in higher, but manageable loan defaults.”
The cooperative financial group has prepared itself with a risk provisioning for the possible bursting of loans, which has increased significantly by 1.5 billion euros to a good 2.3 billion euros. The higher provision is also one reason why the consolidated pre-tax profit of 7.2 billion euros was well below the previous year’s figure of around 10.2 billion euros. At the time, increases in value on the capital markets drove the result upwards.
After taxes, the group achieved an annual profit of a good 5.0 billion euros in 2020 (previous year: 7.0). The financial group includes 814 (previous year: 841) Volksbanks and Raiffeisenbanks, the Sparda banks and the DZ Bank Group.
BVR President Marija Kolak warned in the debate about a European deposit insurance against premature concessions by Germany. Cases such as that of the now insolvent Greensill Bank in Bremen show “what false incentives can arise from a communitarian deposit insurance”, explained Kolak: “Banks without a sustainable business model aggressively attract deposits because they can hope to be absorbed by a joint deposit insurance afterwards. »
The Greensill Bank AG had lured in low interest rates with comparatively high savings rates on overnight and fixed-term deposits. In the meantime, the Bremen public prosecutor’s office is investigating suspected falsification of accounts. The financial supervisory authority Bafin closed the Bremen institute at the beginning of March this year, on March 16 the Bremen District Court opened insolvency proceedings. Private investors affected by the bankruptcy were largely compensated, and several municipalities are still worried about millions.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
