Loan against cheese
Is it all just cheese? Why parmesan is stored in bank vaults in Italy and why Deutsche Bank is now betting on the edible gold
Hundreds of thousands of wheels of cheese are stored in the depots of the Italian bank Credito Emiliano.
© Florian Schuh/dpa Themadienst/Picture Alliance
In a bank vault you expect money and gold, but not necessarily cheese. This is exactly what Italian banks have been storing for decades – with the highest security precautions.
Stacked on huge shelves from floor to ceiling, they shine golden, the gems in the vault of the Italian bank Credito Emiliano (Credem). But not all that glitters here is gold. The bank has been relying on another valuable asset for more than half a century – Cheese.
Located between Parma and Modena, the small Montecavolo is home to the Quattro Castella. There is a Credem Bank warehouse there, which is often referred to as the Fort Knox of Parmesan. Hundreds of thousands of wheels of cheese mature there under the highest security precautions. There is a lucrative business model behind this because the bank grants the manufacturers loans and uses the cheese as security.
Cheese as a loan
The idea behind it is simple. The producers take their cheese to the bank, where it is stored as security. In return, the bank pays the manufacturers a loan. The money enables them to make new investments. The wheels of Parmesan are stored in the halls of the banks and usually mature there for two years, sometimes three. If the cheese is ready for sale, the producers can trigger it by repaying the loan.
If they can’t raise the money, the bank sells the cheese. The risk is low for both sides. Economists from the elite Harvard University took a closer look at the cheese loan model years ago. “Banking on Cheese” is the name of the case study by Nikolaos Trichakis, which deals with the concept behind it.
The Parmesan Robbery
The Credem credit institute has been working with cheese since the 1950s and the manufacturers are happy to accept the offer. Not only does it allow them to remain liquid, it also gives them the opportunity to let their cheese mature under optimal conditions and constant control. A task that small companies in particular often cannot manage alone. There is also the security aspect. The hurdles to breaking into a bank are much higher than breaking into a cheese dairy in the country.
Thieves also know how valuable the cheese is. The cheese dairies are repeatedly looted by gangs. Many manufacturers therefore use the deposits of the credit institutions. But there is no 100 percent security there either. In 2003, they broke into a building belonging to a Credem subsidiary and stole one million euros in the form of 2,500 wheels of cheese. Each of them was worth around 400 euros.
Deutsche Bank relies on cheese
Hundreds of thousands of wheels of Parmesan are stored in the vaults of the Credem Bank from Emilia-Romagna alone. Other banks in northern Italy also work with cheese loans on a smaller scale. Now Deutsche Bank has also gotten a taste for it. The institute takes the Italians as a model and enters the cheese business.
At the end of 2020, Deutsche Bank announced that the institute accepted 125,000 wheels of cheese in exchange for a 27.5 million euro loan. The Ambrosi company wants to use the money to build a new ripening facility.