Frankfurt Now it’s official: at a board meeting, the private banking association BdB accepted the Hamburg Commercial Bank (HCOB) into the voluntary deposit insurance scheme. The former HSH Nordbank got into trouble during the financial crisis and had to be rescued by the state. In 2018, HSH was the first Landesbank to be privatized. The successor, HCOB, has now been included in the BdB’s deposit protection fund as the first former public law institute.
BdB General Manager Christian Ossig speaks of “good news for the entire banking sector” and an “important signal for consolidation in Germany”. The BdB has proven that “Landesbanken can be privatized”. However, Ossig also admits that joining the HCOB was “not an easy process”. The auditing association of the BdB turned every stone at the Hamburger Bank to ensure the safety of savers. “
But the admission of the HCOB is not the greatest challenge facing the deposit insurance of the private banks. After the bankruptcy of the Greensill Bank in Bremen, the BdB undertook a fundamental reform of the security fund and the auditing association, which controls whether member institutions adhere to the deposit protection rules.
“I am confident that we will achieve a good result, but here care comes before speed, we have always emphasized that,” says Ossig on this subject. Originally it was said that the BdB board should vote on the renovation in autumn. Now, according to information from the Handelsblatt, an agreement will take place until the end of this year. Until the details of the compromise have finally been legally examined and the BdB committees can formally approve it, it should be 2022.
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The bankruptcy of Greensill Bank, the subsidiary of a British supply chain financier, was a decisive event for German private banks. The BdB’s deposit insurance had to take around three billion euros in the spring to compensate investors.
Major restructuring of the deposit insurance
In the planned renovation, not only risk management and the culture of the auditing association are on the agenda. According to information from the Handelsblatt, there are essentially two strands: Which investor groups should still be protected by deposit insurance in the future, and for which sums should the voluntary protection apply in the future?
In Germany, 100,000 euros per depositor per bank are legally protected. In addition, most banks belong to voluntary security systems, which offer an even higher level of protection. At the BdB, the upper limit per customer has so far been 15 percent of the liable equity of the respective bank, an average of 190 million euros.
The BdB also talks about whether the funds from public companies and institutions should still be secured in the future. After the Greensill bankruptcy, the Kölner Stadtwerke as well as the broadcasters NDR and Südwestrundfunk were among the victims.
The then BdB President Hans-Walter Peters had criticized the fact that Greensill often had the same public investors parked money as they did with the insolvent Maple Bank and the German subsidiary of Lehman Brothers. “We cannot accept that addresses appear very often that basically transfer the risk to the private banks over and over again,” Peters complained after the Greensill collapse. Savings deposits from cities and municipalities have been excluded from deposit protection since October 2017, just like the money from large professional investors.
Potential Conflicts of Interest
Now Peters has to‘ Successor as BdB President, Deutsche Bank boss Christian Sewing, will moderate the restructuring of the deposit insurance. Some association members see this as the biggest challenge so far for Sewing in his role as top private bank lobbyist.
There is talk of lively discussions and potential conflicts of interest for the bank president. Because big banks like Deutsche Bank or Commerzbank would have to pay the lion’s share of the compensation in the event of damage, they would have a great interest in reducing the scope of protection as much as possible, it is said.
On the other hand, the highest possible protection of their deposits is an important argument for the smaller institutions in the competition for customers. Sewing is very aware of his responsibility as association president for the interests of all BdB members, it is said of these allegations from financial circles.
Even if the renovation negotiations are still dragging on – one result is already certain: the BdB auditing association will have a new start in terms of personnel after the Greensill debacle.
Management Board spokesman Manfred Kühnle has given up his post because of the damage. Deloitte manager Hans-Dieter Bienen has taken on the task on an interim basis. According to information from the Handelsblatt, bees should definitely remain part of the board in the long term. The search for a new boss for the testing association initiated by the personnel consultancy Egon Zehnder has not yet been completed.
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