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A nationwide branch and ATM network, interest on call money – that’s what many savings bank customers want. Consumer advocates now want to enforce this by law.
Large-scale branch closures, especially in rural areas, blown up ATMs that are not replaced, zero or even negative interest on overnight money – savings bank customers have had to swallow a few bucks lately. Just a few weeks ago, the Mittelbrandenburgische Sparkasse – after all, the largest savings bank in East Germany – shocked people with the news that they wanted to close 30 of their 141 branches.
Local and state politicians then went on the barricades. Their fear: Above all, older and non-technical people who do not do online banking could be left behind.
What are they asking for consumer advocates?
The consumer protection centers (VZ) in Bavaria, Brandenburg and Hesse are of the opinion: Things cannot go on like this. They are now demanding a change in the respective savings bank laws and see themselves encouraged by a legal opinion by the administrative scientist Janbernd Oebbecke. The emeritus professor at the Westfälische Wilhelms-Universität Münster is convinced that “there is a certain factual scope for consumer protection specifications that can be used”.
But what exactly are consumer advocates asking for? A nationwide network of branches and ATMs as well as reasonable interest on savings – these are probably the most important demands of the three consumer advice centers. For example, “the minimum number and the distribution of staffed branches and ATMs” should be determined by law. A comparable procedure is known from the Postal Universal Service Ordinance for Deutsche Post AG, where, among other things, the number of mailboxes is regulated throughout Germany in order to ensure nationwide availability.
Savings banks should encourage saving
“The savings banks must be there for the people again, just as they were once created as public institutions,” said Marion Zinkeler, CEO of VZ Bayern. The generation of profits should therefore not be the main purpose of business operations.
In fact, the latter is already included in the Hessian Savings Banks Act: “Making a profit is not the main purpose of business operations,” it says in paragraph 2, paragraph 6. The tasks of the savings banks are outlined in the same paragraph. For example, they have the task of “providing monetary and credit services, in particular providing the opportunity for safe investment of funds”. The savings banks are also responsible “in particular for promoting savings and other forms of wealth accumulation”.
The death of branches has reached large proportions
It is not only consumer advocates who are wondering whether the savings banks are living up to this legal mandate. How should that be possible if the savings banks follow the example of big banks like Deutsche Bank and close their branches en masse? A look at the statistics shows the dimensions of the savings bank branch deaths: at the end of 2021, the number of domestic savings bank branches was 7,732. For comparison: ten years earlier there were 12,810 branches – this corresponds to a drop of almost 40 percent.
“The victims are senior citizens and people who are less mobile or digitally savvy than other population groups,” explains Christian Rumpke, Managing Director of VZ Brandenburg. According to a representative survey by the Association of German Banks in October 2022, 22 percent of those surveyed did not use online banking, compared to 35 percent of those over 60.
Zero interest instead of 3.5 percent on call money
In addition, a number of savings banks are still dealing with zero interest rates on overnight money. “We observed that the savings banks very quickly raised custody fees during the low-interest phase,” emphasizes VZ board member Zinkeler. On the other hand, the current positive development in interest rates will not be passed on to consumers. The consumer advocates are therefore demanding that the savings banks “accept deposits from consumers in the amount of the statutory deposit guarantee and pay interest on them”.
In fact, the deposit rate in the euro zone has recently risen significantly – that is the rate at which banks can “park” excess liquidity with the ECB until the next business day. In a way, it is the “benchmark” for call money rates. It is currently 3.5 percent.
With the ING, the first private institute has already pushed ahead: the largest German online bank is offering 3.5 percent interest for new customers as of today. Meanwhile, Sparkasse customers are still looking in vain for offers that are even remotely comparable.