A study by the Frankfurt finance scientist Professor Ralf Jasny on the subject of “What savings banks do with their customer funds” particularly upsets those who were written about: the savings banks. Jasny had explained on the basis of balance sheets that some savings banks had invested a lot of their customers’ money in shares, which is now taking revenge in view of the gloomy mood on the stock exchange. The Savings Banks Association rejects this. The scientist is now posting a guest article for FOCUS Online.
Apparently one or the other from the savings bank camp has difficulty dealing with public criticism. However, I ask myself: What is reprehensible about the inquiries based on the publications in the Federal Gazette? Are the savings banks’ own numbers wrong? Or: Why don’t some savings banks simply pay out their profits to the municipalities – do they not need the money or are there no more profits?
Or currently: Why can it be risky to invest several billion euros in the stock market? The Savings Banks Association answers this question quite undifferentiated according to the motto: “No problem, everything is fine!”. He refers to average values. Yes, if you put one foot in ice water and the other in boiling water, you may feel fine on average, but personally you have a problem.
History repeatedly shows that those who flagged up a possible imminent problem are always countered in the same way. It is always said that either the risk is not there. Or, if it’s still there, it’s not that big. Or if it’s there and it’s big, it’s still not a problem, then you can deal with it. The defense strategy also includes attempts to use personal attacks to discredit the credibility and competence of critical customers.
This reminds me of what happened before the financial crisis, when nobody dared to ask critical questions about the term “mortgage-backed securities”. It also reminds me of Wirecard, where critics have been mocked and persecuted for far too long.
In both examples we know the consequences. What is particularly stupid about a phenomenon like “risk” is that it doesn’t go away by closing your eyes. The President of the East German Savings Banks, for example, knows this. He concedes that the higher interest rates mean that value adjustments on bonds are necessary, but adds, to put it mildly, that these would be “only” book losses.
In the end, however, a loss is a loss. These losses arise because rising long-term interest rates lead to falls in the price of bonds – the longer the term and the higher the rise in interest rates, the greater the decline – in the case of the government bond from Austria, which runs until 2117, it was more than 50 percent this year.
Therefore, in this way, a call for more objectivity! Because that’s what the study is about. One of the key findings is that most savings banks in Germany run their business as provided for in the savings bank laws of the federal states, namely: customers bring their savings deposits there, the savings bank makes loans to local companies, finances the real estate and takes care of it the people in the region.
In this sense, the savings banks Syke and Reichenau are outstanding, the latter even opened new branches – contrary to the trend – and increased profits in 2021. Nobody talks about this, not even the Savings Banks Association. It’s a pity, really, because that proves that successful, classic savings bank business is possible, despite the “low interest phase” and high regulatory requirements.
So why the fuss? There are some savings banks that prefer to invest their customers’ money in securities instead of lending to the local population. Is this a problem? As long as there are no erratic movements on the capital markets, things are going well. But if not? The stock market movements of the last 1.5 years have already caused one or the other impact.
Do not you believe? Out of respect for the institution, I will not name the names here, but just a few numbers at this point: A small savings bank in Saxony, for example, speculated in 2020 with shares and share derivatives over 47 million euros within a year. This corresponds to around 500 euros per inhabitant in the catchment area. No Sparkasse official takes a position on this. The local district administrator – after all, as chairman of the board of directors responsible for the business policy of the savings bank and its monitoring – said in the local newspaper only: “Banking will never be risk-free.”
Small consolation? Or rather a sad realization: If savings banks are monitored with such (financial) expertise, nasty surprises like this one are inevitable.
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