Credit demand is falling

Dhe German banks are complaining about a lower demand for credit. At the New Year’s event of Federal Association of German Banks (BdB) on Monday in Frankfurt, Deputy General Manager Henriette Peucker said that the lower demand could be observed in all areas, not just in construction financing. According to her, the turnaround in interest rates is good news for the banks because of the higher earnings, but one of the risks is the lower demand for credit. She complained that most of the new lending business was for liquidity purposes, but not investments. “We would like to see most of the credit demand for investment.”

Peucker once again criticized the higher equity requirements for German institutes. From February 1, they must meet the countercyclical capital buffer of 0.75 percent for loans in general and the systemic risk buffer of 2.0 percent for housing loans. The Financial Stability Committee, to which the Federal Ministry of Finance Federal Bank and the financial supervisory authority BaFin, decided a year ago. The BdB managing director understands that the supervisory authority has been calling for more caution in the lending business for months. But a balance between stability and the financing of the economy must also be found.

Enormous investment requirement

“It’s a location factor,” emphasized Peucker, who continues to represent the general manager, Christian Ossig, who is recovering. She recalled the enormous need for investment resulting from the focus of the economy on climate and environmental protection. The financing of the green transformation must be accompanied by the banks. The business of banks, she says, is risk management, not risk avoidance.

Henrietta Peucker

Henrietta Peucker

Image: dpa

The banking association still has to be patient for a decision by the Bundestag. It is about 2.3 billion euros that German banks paid between 2011 and 2014 into the Financial Market Stabilization Agency (FMSA), which was set up for rescue measures after the financial crisis. They have been paying into the EU Resolution Fund (SRF) since 2015 and now want to use the old funds for this. “These must remain in the system,” Peucker now renewed the demands. First was a proposal from the Federal Minister of Finance Christian Lindner (FDP) was expected after the summer break. But this one is still a long time coming.

Bundesbank supports banks

That of the former Green finance politician Gerhard Schick founded citizens’ movement Finanzwende criticizes the demands of the banks as outrageous. These, in turn, want to offset the old funds against the European bank levy. For the past year, they have to pay 3.38 billion euros into the EU resolution fund. The contribution has thus increased by more than a third compared to 2021. The SRF has so far comprised 66 billion euros and is expected to reach 80 billion euros by the end of 2023. The banks are supported by the Bundesbank, which considers it justifiable if the old funds are used for outstanding contributions to the European resolution fund SRF. These old funds raised by the banks were used for settlements anyway.

On the other hand, Finanzwende refers to the bank rescue fund Soffin, which still had debts of 21.8 billion at the end of 2021. These consist primarily of the decline in value of the Commerzbank stake and the support measures for the liquidated Hypo Real Estate. “Demanding money from the federal government, even though debts from the bank bailouts are still outstanding, is just outrageous,” said Finanzwende founder and board member Schick in August, criticizing the banks’ demands.

With a view to the digital euro planned by the European Central Bank (ECB), Peucker spoke out in favor of bringing this into circulation via commercial banks.

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