The munchner sparkasse is the largest municipal financial institution in germany to date to offer a 28 percent stake in the company.000 premium savings contracts.
The fifth largest savings bank in germany justifies this with the costs due to the zero interest rate policy of the european central bank (ECB). In addition, munich’s savings bank bosses reserve the right to terminate old contracts as of 1 january 2009. October of new customers with credit balances of more than 100.000 euro on checking or cash account penalty interest. The purpose of this announcement: the savings bank wants to prevent its deposits from growing too much. This was first reported by munich newspapers.
The munich savings bank is not the first, but so far the largest savings bank to take drastic steps to mitigate the effects of the zero interest rate policy. The leipzig savings bank was the nationwide pioneer; in bavaria, the nurnberger savings bank was the last to do so in july 21.000 premium savings contracts announced. These are lucrative savings contracts without a fixed term, which have reached the highest interest rate after 15 years.
In may, the federal supreme court (BGH) in karlsruhe ruled that long-time bonus savers must accept the termination of their old contracts by the savings banks if they have exhausted the bonus scale once agreed upon. In the case, customers of the stendal district savings bank in saxony-anhalt had filed a lawsuit, wanting to continue three corresponding contracts from 1996 and 2004.
A current reason from the point of view of the munich savings bank for the cancellation of the savings contracts: for a long time now, banks have had to pay penalty interest on their deposits with the ECB. On 12. September the ECB had raised this negative interest rate from 0.4 to 0.5 percent. For banks, that means the more money they park at the ECB, the more expensive – and the more money customers deposit at a bank, the higher the cost.
The munchner sparkasse has a total of 800.000 customers, cancellation of premium savings contracts affects three percent of customers. Savings banks, like volksbanken and raiffeisenbanken, live among other things from the interest rate spread between lower deposit rates and higher lending rates. Because of the zero interest rate policy, this margin continues to shrink; lending rates are now so low that many banks are struggling to cover their costs. As interest margins fall each year, the bottom line is less and less, despite rising balance sheet totals. At the bavarian savings banks, net profits fell by 4.5 percent in 2018 to 343 million euros.
That’s why regional banks nationwide have tried to counteract the crisis in recent years: with flat-lining higher commissions and fees, the closure of thousands of branches, mergers and staff reductions. Savings banks and cooperative banks together employed around 53 people nationwide at the end of 2018.000 fewer people than in 2012.
According to munich savings bank bosses, however, the savings measures taken so far are no longer sufficient. So far, the savings bank has found "various ways" to compensate for declining earnings. But now punitive interest rates for wealthy new customers are on the cards – an announcement that the munich savings bank describes as a necessary precautionary measure. "Customers with existing accounts are not affected by this regulation," municipal bankers try to reassure their customers.
Consumer groups and politicians from federal finance minister olaf scholz (SPD) to bavarian minister president markus soder (CSU) have warned banks against punitive interest rates. But every top politician knows that the savings banks belong to the municipalities, and the supreme controller on the board of directors is usually the local lord mayor or the district administrator.
And these heads of the administrative council belong to SPD, CDU or CSU in a lot of savings banks. The gloomy scenario for the future: if interest rates remain this low for a long time, many regional banks will sooner or later be threatened with red figures, as experts have been warning for years. So far, this has not happened, but time could be running out.