Savings banks are examining bad banks for troubled state banks

Muenster The savings banks want to avoid having to save troubled state banks again and again – like NordLB in 2019. That is why the Westphalian savings bank president, Liane Buchholz, is now pleading for the creation of a bad bank, with the help of which state banks could be wound up more easily in the future.

“If an institution in our group gets into trouble, we have to strengthen the capital. We don’t have any other options,” said Buchholz in an interview with Handelsblatt. “We therefore need additional instruments to be able to deal with cases of doubt.”

That’s why she suggested in the round of savings bank regional presidents to “establish a processing unit that can take over portfolios from institutes in an emergency and then reduce them over time”. The German Savings Banks and Giro Association (DSGV) is now examining this.

“At the end of the day, such a bad bank benefits the entire group in a crisis,” said Buchholz. If her proposal goes through, it would be quite a revolutionary change for the public banking sector.