"The crisis has gripped the middle class." This was said by Liane Buchholz on Tuesday. The president of the Sparkassenverband Westfalen-Lippe is a friend of clear words. Just like her federal counterpart Helmut Schleweis, for whose successor she had thrown her hat into the race, but then had to admit defeat to her Bavarian counterpart Ulrich Reuter. He will probably win the election, because he knows the majority of the twelve German savings bank associations behind him. Buchholz did not address this personnel in her speech at the annual press conference in Münster.

Archibald Preuschat

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Markus Frühauf

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She was clearer in her description of the economic framework conditions of her customers: The loss of prosperity hit people hard: "Around half of the people state that they fall back on their savings. 70 percent postpone major purchases. The number of negative entries at Schufa has increased by around 30 percent compared to the previous year. As the Federal Statistical Office determined, even before this crisis year, almost a third of all Germans had no money to cope with unexpected expenses of more than 1150 euros."

When do customers get more interest?

The figures of the 52 savings banks at the end of the year (currently there are still 50 after mergers) in Westphalia and Lippe certainly indicate this. Although people still have money that they can put on the high edge. But the savings rate fell from 15.1 percent in the corona year 2021 by 3.9 percentage points to 11.2 percent.

"The fact that people were able to increase their deposits at all in view of high inflation may seem surprising at first impression. However, we assume that they increasingly kept their money at home in cash during the negative interest rate phase in order to avoid custody fees. With the turnaround in interest rates, this money is increasingly ending up in the accounts again," said Buchholz.

However, inflation has eaten up 93.2 billion euros of the 7.4 billion euros that the Westphalian-Lippe savings bank customers have on the high side. This cut severely exacerbates the conditions under which people carry out their pension provision and also leads to an expansion of poverty in old age, which is gaining momentum, especially among women.

Now it would be up to the savings banks to compensate for the loss of value of the savings by interest. After all, the European Central Bank pays the institutions 2.5 percent for their deposits. And the savings banks in particular are not exactly known for passing on such interest rates to their customers. Buchholz remained accordingly vague: "When the markets have leveled off, call money, savings books, fixed-term deposits and life insurance policies are likely to be in a completely different light again."

When, she left open. Whether there are already savings banks in the region that pay savers interest is unclear. There are no figures about this, which is due to the fact that one should not influence the pricing policy of the individual savings banks, it was said by the association on demand.

All the more meaningful are the figures on how the interest rate turnaround has affected the savings banks themselves. Net interest income rose by 6.8 percent to 2.38 billion euros. However, the valuation result is clearer, halving the operating result of around EUR 1.4 billion. Of the 703 million euros, 668 million euros had to be written off on securities.

High write-downs on bond holdings

In 2008, during the financial crisis, it was 524 million euros. As a result of the rise in interest rates, the market value of bonds in which the savings banks invest customer deposits that they could not pass on as loans has fallen. All in all, the savings banks in Westphalia and Lippe still had an annual result of 164 million euros.

The valuation result hit the savings banks in eastern Germany, which also presented their annual balance sheet on Tuesday, even more drastically. The 43 public-law institutions in Brandenburg, Mecklenburg-Western Pomerania, Saxony and Saxony-Anhalt achieved a result of EUR 1.32 billion before valuation, but had to write down EUR 1.42 billion on own securities investments.

The valuation losses are also worrying the banking supervisors at the Bundesbank and the financial supervisory authority BaFin. "For many smaller banks, the hidden reserves as the first line of defense are now used up," said Bafin President Mark Branson in January. Heinz-Gerd Stickling, partner at the consulting firm Zeb, counters that savings banks and cooperative banks hold the bonds predominantly until maturity. "Thus, the depreciation necessary today is the attribution of the future," he said at the request of the F.A.Z.

The valuation losses were mainly limited to the securities side or to impact interest rate risks. However, the securities in the own investments (depot A) are of very high creditworthiness and liquidity. These attributes characterize government bonds, for example. According to Stickling, the creditworthiness of the loan books is high, and thanks to the comparatively stable economic outlook – no severe recession in sight – and stable real estate markets combined with high security standards, he does not expect high write-downs on loans in the foreseeable future.