Frankfurt The German savings banks are making a turn in dealing with controversial payments from premium savings contracts. More and more savings banks are at least open to paying customers interest from long-term savings contracts.
“Some savings banks are adapting existing premium savings contracts and agreeing on fixed interest rates with customers, for example,” said Executive President Ludger Weskamp to the Handelsblatt. “In other cases, if there is a chance of reaching an agreement, savings banks will enter into settlements and make further payments.”
There are various options depending on the exact structure of the premium savings contracts, said Weskamp, who took office at the beginning of the year, on Tuesday. The OSV represents a total of 43 savings banks.
According to the association’s president, Ulrich Reuter, many of the 63 Bavarian savings banks are taking a similar approach. “We also try to come to an agreement with as many customers as possible.” This applies above all when the contracts end.
The savings banks are allowed to terminate premium savings contracts under certain conditions. Two weeks ago, the Baden-Württemberg Savings Banks Association, to which 50 savings banks belong, explained that the financial institutions were trying to make as many comparisons as possible.
Savings banks face reputational damage
Savings banks are thus gradually reacting to a ruling by the Federal Court of Justice (BGH). In October 2021, this decided for the first time that savings banks may only adjust the interest rates in premium savings contracts according to clear criteria. In this case, the consumer advice center in Saxony had taken action against the Sparkasse Leipzig by means of a model declaratory action and had calculated average customer claims of 3,100 euros.
The BGH decision ultimately leads to higher interest payments. The Savings Banks must therefore also use long-term market interest rates as a basis for long-term savings contracts. In addition, there is a relative distance to the reference interest rate, which has a positive effect on customers in phases of low interest rates.
However, so far only a few savings banks have become active on their own and offer additional payments directly. The Kreissparkasse Köln goes relatively far. Last week she announced in the Handelsblatt that she would write to 25,000 customers as a first step and determine additional payments as a second step.
>> Read here: Repayment of account fees: consumer advocates sue Sparkasse am Niederrhein
For the savings banks, the dispute over the correct calculation of interest entails the risk of high back payments. On the other hand, there is a risk of reputational damage if you do not accommodate customers despite the Federal Court of Justice ruling and the corresponding request from the Bafin financial supervisory authority.
There are a total of 15 model declaratory actions against savings banks, almost all of them against East German credit institutions. Most of the premium savings contracts were concluded between 1990 and 2005 – with an invalid interest rate adjustment clause, as has now been established.
There are a million premium savings plans
According to Bafin, there are around one million premium savings contracts nationwide. Consumer advocates recently accused savings banks of gambling on the statute of limitations on customer claims. Savings banks have canceled premium savings contracts on a large scale since 2017. Claims from contracts that were terminated in 2019 expire at the end of 2022.
With premium savings contracts, consumers receive a bonus that increases over time, also known as a premium, in addition to the variable basic interest rate, which is based on a reference interest rate. The highest bonus is often equal to or half the savings deposited that year. In view of the zero and negative interest rates, the contracts are very attractive for consumers, but a loss-making business for savings banks.
However, the question of the specific calculation of interest is still open. The BGH has not decided how exactly the affected savings banks should calculate the interest. This is to be determined by the lower court, the Higher Regional Court (OLG) Dresden, with the help of experts. However, it could still be some time before the question is finally resolved, because both parties to the dispute could go back to the BGH after the Higher Regional Court judgement.
OSV President Weskamp said: “The savings banks want to maintain a good relationship with their mostly long-standing customers and do not want to wait for the outcome of further appeals.” Bavaria’s savings bank president Reuter emphasized that the Gelhäuser proceeded very differently, also depending on the exact form of the contracts. Some of the savings banks are waiting “until the situation has finally been clarified”.
Financial supervision is also putting pressure on banks. Last June, i.e. before the BGH judgment, she published a so-called general decree. In this way, the Bafin wants to force credit institutions to inform holders of premium savings contracts about invalid interest clauses and to promise additional payments in the event of incorrect interest clauses.
The Bafin rejected objections to the general decree four weeks ago. Almost 1,200 banks, 70 percent of the industry, had taken action. Savings banks and cooperative banks had bundled these in test cases.
Consumer advocates are skeptical about the amount of the additional payment offers
Some savings banks do not see themselves affected by the BGH ruling. According to Liane Buchholz, head of the association, the savings banks in Westphalia have premium savings contracts that differ significantly from those of the Leipzig savings bank. The 55 Westphalian savings banks usually have savings contracts where customers can access the funds they have saved – “a completely different type of contract,” says Buchholz.
Nevertheless, the savings banks are approaching their customers: they would now ask them to agree to the current procedure for calculating interest.
The consumer advice center in Saxony, which has initiated a number of test cases, welcomes “the fact that there is finally movement towards customers in the savings bank landscape”. “We hope that all other savings banks will follow the first examples,” said Andrea Heyer, financial expert at the consumer center. In her view, it would be logical to withdraw the objections to the general decree of the Bafin.
However, based on their previous experience, consumer advocates are still skeptical about what the current actions of individual institutions will bring to savers. “We will look at interest arrears that are being made as a result of this new development and will be happy to review them for consumers,” said Heyer.
More: Eastern savings banks with less operating profit and more negative interest rates