ROUNDUP / Mergers and branch closings: Volksbanks in constant low interest rates | 02/19/21


FRANKFURT (dpa-AFX) –  The  persistent low interest rates as well as high costs for regulation and digital offers are forcing Germany’s Volksbank and Raiffeisenbank to further merge. “Compared to previous years, the pace of the merger has slowed down, certainly also because of the acute challenges posed by the pandemic,” said Ingmar Rega, chairman of the board of directors of the cooperative association, on Friday for the Corona year 2020. “But we see this in view of the 16 announced merger intentions no trend reversal for the current year. ”

Last year, the number of credit unions in the association’s area shrank from 360 to 349. A year earlier, there had been 21 mergers. ©

 The  branch network has also been thinned out for years. A further 425 staffed branches were closed last year, reducing the network to 4089 branches. And this trend is continuing – fueled by the fact that customers are increasingly using digital channels due to the pandemic. According to a survey by the association, 36 percent of the institutes plan to merge branches over the next two years. ©

 The  association represents institutes in all federal states with the exception of Bavaria and Baden-Württemberg.

Rega assured: “©

 The  Volksbanken and Raiffeisenbanken will remain present in the area above all through advice centers.” Visibility and personal contacts in the region were part of the brand essence of the cooperative banks even in the digital age.

In the crisis year 2020, the regionally anchored institutes were in demand as lenders, among other things. ©

 The  total loan volume increased by 6.4 percent to around 332.9 billion euros compared to the previous year.

According to the association, there was an unprecedented influx of customer deposits: ©

 The y climbed 8.9 percent to a good 384.9 billion euros. “Increasingly higher financial assets are being parked permanently,” Rega noted. 280 billion euros and thus almost 73 percent of the total deposits at the Volks- and Raiffeisenbanken in the association area are now sight deposits, for example in overnight money accounts. Customers can quickly redeploy there if necessary.

This trend is becoming an endurance test for the banks. Because they have to pay 0.5 percent interest when they park money at the European Central Bank (ECB). “©

 The  negative interest rates are having an ever greater impact on the banks’ balance sheets. ©

 The  excess liquidity resulting from the massive increase in deposits represents a major business challenge,” said Siegfried Mehring, vice president of the association.

It is increasingly evident that customers are parking money where it has previously cost nothing. In the case of new customers, according to Mehring, the institutes “are now proceeding relatively consistently and are calculating negative interest”. With existing customers with high sums, “individual solutions” for investment alternatives would be discussed.

“If the banks do not want to pass the negative interest rate on to their customers across the board, this could sooner or later affect lending,” said Mehring. In the case of mortgage lending with a long term and conditions of less than one percent, the institutes “can actually no longer achieve a margin” ./ ben / DP / men

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ROUNDUP Mergers branch closings Volksbanks constant interest rates


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