Some economists criticized the federal government’s latest aid package on Monday “with the watering can”. One accusation is that the reduction in electricity prices would also benefit households with higher incomes, for example. But not only wealthy private households benefit from the state aid in the energy crisis: the protective shields against the gas crisis also help the banks indirectly. This is most obvious at Uniper. When the gas company applied for a further four billion euros in bailout loans last week, “he failed to mention some big beneficiaries of this move”, wrote the Bloomberg news agency and added: “His banks.”
In fact, the group has loans from 16 banks in the amount of a total of 1.8 billion euros outstanding – for example at Deutsche Bank, Bayern-LB, Commerzbank or at international banks such as the French BNP Paribas or Goldman Sachs. There are also bonds that Uniper has placed on the capital market. All of them, the banks and investors, are of course now benefiting from the fact that the state caught up with the supplier, initially with 15 billion euros – now there was a schnapps on top of that. Even if it is not publicly known how the loan package is distributed among the individual institutes: a bankruptcy would have torn visible holes in the balance sheets of the lending banks.
In the meantime, the bank towers are openly praising the federal government’s energy – at least when the shareholders are listening. At the same time, such interventions contradict the regulatory self-image of most bank bosses in normal times. Now, however, the managers are clearly referring to the help from the federal government, after all, the share prices of the banks have fallen considerably in the past few weeks – confident statements can’t hurt.
Banks save less for bad loans
The expectation is that taxpayers will foot the bill in the energy crisis, just as they did in the pandemic. Bettina Orlopp, CFO of Commerzbank, said recently to analysts: “We are convinced that there will be some government action if Russia were to stop its natural gas exports to Europe.” They didn’t even bother to calculate how much the reserves would have to be increased without state aid. Such a scenario is simply not realistic, says Orlopp. The bank expects new rescue programs when it matters most “because they have proven to be very efficient during the Corona pandemic”. Deutsche Bank boss Christian Sewing is also certain that the governments in a would “step in” in an economic emergency.
Consequently, the uncertain economic situation has not yet made itself felt in the business results of most German financial institutions: even in the second quarter, when the energy crisis had worsened significantly, many banks did not increase their provisions for bad loans, but reduced them in comparison even significantly compared to the previous year.
The financial sector already benefited indirectly from state aid during the Corona crisis. In order to prevent mass company bankruptcies, the federal government had granted state-guaranteed loans for around 50 billion euros through the KfW development bank. To thousands of medium-sized companies, but also to corporations such as Tui and Lufthansa. Their insolvency would also have torn holes in bank balance sheets, which is probably why the federal government was also concerned with preventing a banking crisis. The ECB also stepped in with loans that do not have to be repaid in full. Nice for the banks: there are no requirements for the financial institutions. Unlike in the financial crisis or the rescued companies, there are no new restrictions on bonuses or dividends.