The savings banks in Germany do not see billions in write-downs on securities holdings as a cause for concern. “Currently I don’t know of any savings banks that are in trouble,” said the President of the German Savings Banks and Giro Association (DSGV), Helmut Schleweis, on Tuesday in Frankfurt. “The savings banks have the strength to bear such depreciation.”
As a result of the interest rate hike by the European Central Bank (ECB) since the summer, there have been price losses on the markets for government bonds, for example, which make up a large part of the savings banks’ own investments. The result: the institutes had to write off almost eight billion euros on fixed-interest securities for the past year. According to preliminary figures, the surplus of the 361 (previous year: 367) institutes fell from a good 1.6 billion euros to around 1.5 billion euros within a year.
“If the securities are held to maturity, which is usually the case with savings banks, then they are repaid 100 percent and the value adjustments made in the meantime are made up for,” said Schleweis.
More leeway for savings interest
The DSGV President emphasized that there was no comparability with the collapse of the Silicon Valley Bank (SVB) in the USA: “We will not see any effects on German savings banks, and the case is not at all comparable with the business model of the German savings banks. ” The US institute, which specializes in start-up financing, had invested a lot of money in long-term US government bonds during the low-interest phase, which lost value with the turnaround in interest rates. At the same time, customers withdrew a lot of money in a short time. The SVB was closed after a failed emergency capital increase on Friday and placed under state control.
On the other hand, rising interest rates ensure higher returns. At the savings banks in Germany, net interest income – i.e. the difference between what the institutes collect for loans on the one hand and what they pay their customers as savings interest on the other – increased by 9.2 percent to 21 billion euros within a year. “We expect this positive development to continue in the coming years,” said Schleweis. Then there will be more scope for higher interest rates on savings.
