Frankfurt The idea was almost dead, but the savings banks just won’t let it go. Even association president Helmut Schleweis had already given up his dream of rapid consolidation of the sector, but despite stubborn resistance from many quarters, important players in the savings bank camp want to push ahead with the creation of a central institute and are developing concrete plans for this.
“This leading institution must primarily act as a service provider for us savings banks and in the end may only have risks of a magnitude that we savings banks can also afford,” emphasized Strohmaier. Ideally, the savings banks would be the sole owners of this institute.
If these conditions are met, there will be few contradictions in the entire savings bank organization, Strohmaier believes. “The challenge is certainly the way to get there.”
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Strohmaier is head of the Sparkasse Niederbayern-Mitte and represents the interests of the savings bank board members within the German Savings Banks and Giro Association (DSGV). His predecessor was the current DSGV President Schleweis.
The 67-year-old has long campaigned for the creation of a central institute, but has made little progress due to opposition within the sector. In September, Schleweis vented his anger in an interview with the Handelsblatt and buried his hopes of a timely merger between Landesbank Hessen-Thüringen (Helaba) and fund provider Deka.
Proposal provides for total assets of 500 billion euros
“Successful talks can only be held if there is the necessary will from all owners, who have to agree,” said Schleweis. Since this does not exist, it currently makes no sense to continue to deal with a merger. “I don’t waste management capacities on something that the necessary parts of the owners expressly do not want.”
In the Savings Banks Finance Group, Schleweis’ statements caused heated discussions and an outcry from those in favor of a central institute. They argue that the public sector must be more efficient in view of the competitive pressure and the critical monitoring by the banking supervisory authority of the European Central Bank – and therefore cannot shelve the plans for a central institute.
As a result, discussions about a vision for a central institute were resumed. The Savings Banks Association of Hesse-Thuringia, which owns the majority of Helaba, contributed its ideas to the discussion.
According to financial circles, the plans provide for the central institute to have total assets of around 500 billion euros. That would mean roughly halving the balance sheet volume of all Landesbanken and a significant reduction in risk. According to the proposal, the central institute should be represented in key business areas such as real estate and corporate customers in order to be able to support the savings banks in these areas – also with a network of foreign locations.
According to insiders, however, there is no concrete timetable as to whether or when the discussion about setting up a central institute will continue. Hardly anyone believes that an agreement will be reached in the near future. One of the controversial questions is who should be part of a leading institute. Some of those involved see Deka as an integral part, while others prefer to keep it as an independent securities house.
Helaba has long been calling for mergers among leading public institutions and, like Deka, had also submitted an offer for Berlin Hyp. The fact that in the end LBBW, of all things, was awarded the contract for the real estate financiers, which has clearly spoken out against a central institute, is seen by some as a setback for Schleweis.
The leading cooperative institute DZ Bank is regarded as a role model
Proponents of further consolidation hope for lower costs and greater efficiency in the long term and point to their toughest competitors, the Volks- und Raiffeisenbanken. They get by with one leading institute, DZ Bank, and unlike the savings banks, they only have one insurer and one building society.
Many savings banks therefore want changes because the challenges are great. The increasing digitization of the business requires further investments, the negative interest burdens the business model.
The Federal Court of Justice posed another potentially expensive challenge last year. According to the judgment of the Karlsruhe judges, the banks often have to ask their customers for explicit consent to the current fees and, under certain circumstances, have to pay back fees.
The highest German civil court ruled at the end of April 2021 that banks and savings banks must obtain the consent of their customers when changing general terms and conditions. Until then, banks and savings banks usually increased the fees via clauses. After that, they assumed that customers would tacitly consent if they did not object to a change within two months.
According to Strohmaier, fee reclaims “are still by far the exception”. “I am convinced that the services provided by the savings banks were transparent at all times and that the services in return were worth a price.” At the Sparkasse Niederbayern-Mitte, reimbursement claims have so far only been made in the per thousand range of eligible customers, said Strohmaier.
Loan loss provisions in 2021 roughly at the level of the previous year
They are currently working “at full speed on the approval campaign”. “Because it is our goal to maintain long-term customer relationships with our customers. The termination of contracts is therefore by no means our goal, but always the last resort if an agreement is definitely not reached,” explained Strohmaier.
The savings bank official is optimistic about another central challenge. With a view to the corona pandemic, Strohmaier points out that medium-sized companies in particular have shown “an amazingly robust resilience”. “According to the information I have, I am currently assuming that the savings banks’ risk provisions in 2021 will be around the same level as the previous year. This is also confirmed in my Sparkasse Niederbayern-Mitte.”
In 2020, the savings banks had coped well with the corona crisis. Loan loss provisions doubled to EUR 1.3 billion. However, earnings before taxes were still 4.1 billion euros, 145 million euros less than in the previous year. However, it is important to bear in mind that the additions to the contingency reserves amounted to only 2.7 billion euros – a year earlier it was more than 4 billion euros.
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