The good news first: A saver in Germany has not yet lost money when a bank collapses. But no bank customer should be lulled into security, because the collateral pots of German banks and savings banks are far from sufficient to protect deposits in a major banking crisis. Whether this is imminent after the collapse of Silicon Valley Bank could be supported by the price losses of bank shares and nervousness on the market. Around the globe, regulators and central banks are eagerly trying to give the all-clear. It is to be hoped that they are right.
Markus Frühauf
Editor in business.
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Even if German savers have so far survived bank failures without damage, the test case of a major bank failure has so far failed to materialise. And some bank customers have already had to let feathers fall, such as the municipalities, which have lost a three-digit million amount in the Greensill Bank, which was closed in 2021. The treasurers, like financial institutions, are no longer protected by the deposit insurance scheme of private banks, which is mainly fed by contributions from Deutsche Bank and Commerzbank. Since the beginning of the year, insurers and semi-public companies such as municipal utilities have also been excluded from protection.
Utopian promises
Your Association of German Banks (BdB) is responsible for the protection schemes of private institutions. In the years following the financial crisis, it had to restructure its deposit insurance twice, significantly reducing the scope of protection. This was also necessary because, for a long time, customers were promised an unrealistic scope of protection that could never have been met. Per customer of Deutsche Bank, 2017 billion euros were to be protected in 11, at Commerzbank it was 6 billion euros. These promises were utopian, the reduction of the protection promises was therefore necessary, but no saver should be lulled into complete security, even with his legal claim to the statutory deposit insurance.
In the EU, this ranges up to 100,000 euros per customer and bank. If you look at the figures of the EU Banking Authority EBA, you can see how the protection systems are. At the end of 2021, private banks had covered deposits covered by the legal guarantee of 705 billion euros. In the backup pot were 3.9 billion euros. The situation was not much better for the savings banks and Volksbanken. As of the reporting date, the German Savings Banks Association protected legally guaranteed deposits amounting to EUR 833 billion with EUR 4.7 billion. The Federal Association of Volks- und Raiffeisenbanken was able to rely on 604.3 billion euros for 5 billion euros.
"German banks are robust and stable"
All three guarantee schemes were each equipped with less than 0.6 percent of covered deposits, by July 2024 they must reach 0.8 percent according to EU requirements. In this case, the compensation scheme of the private banks, which is responsible for statutory deposit insurance, would have 3.9 billion euros at its disposal instead of 5.6 billion. In view of the fact that, for example, Commerzbank has private customer deposits of a good 150 billion euros, this will hardly be enough for the famous drop in the ocean in an emergency.