Credit and liquidity supply: Savings Banks and Landesbanken fulfil their public service mission

Germany’s Savings Banks and Landesbanken are jointly ready to provide very fast support to enterprises and self-employed persons affected by the coronavirus crisis so as to prevent a broad economic slump. “The German Savings Banks Finance Group will amply fulfil its public service mission,” said Helmut Schleweis, President of the German Savings Banks Association (DSGV), at the financial press conference held by the German Savings Banks today. 

The Savings Banks Finance Group has business relationships with roughly two-thirds of Germany’s enterprises. Many of them might very quickly reach the limits of their financial capacity due to the de-facto standstill of public life. The most important function of Savings Banks and Landesbanken, he affirmed, was to help these enterprises and freelancers come through this dark period. The liquidity and credit support programme launched by the German government was a solid and necessary basis. It was crucial to help enterprises and self-employed persons who, under normal circumstances, would not have any access to loans. Only Savings Banks and cooperative banks were able to implement such a programme nationwide in Germany.

As Schleweis observed, it is important that the support reaches those really affected by the crisis quickly and effectively. To this end, the German Banking Industry Committee (GBIC) has agreed the necessary terms with the KfW banking group (Credit Institute for Reconstruction) and in very close cooperation with the Federal Ministry of Finance. As of next Monday, customers can file applications to KfW via their principal banks for this first phase of the support package. At the same time, Schleweis asked for understanding if there were isolated delays due to the situation. “Some things are currently subject to general restrictions. We are making full use of all our resources.”

The purpose of the programmes was to provide immediate support to enterprises affected by the crisis. Where necessary, suspending redemption payments was also an option. Savings Banks are able to grant enterprises very fast loans to meet their liquidity needs. However, this will require a release from liability by the Federal Republic of Germany or by one of Germany’s federal states via KfW or a state-level development bank. Germany’s Savings Banks will ease the burden on KfW by carrying out a risk assessment that KfW can rely on. This will considerably accelerate the process, compared with otherwise standard programmes.

From the perspective of the Savings Banks Finance Group, it is very important that the German government sets up a programme specifically for freelancers, artists and self-employed persons – a programme that can quickly take effect and that can be implemented unbureaucratically. Schleweis welcomed the decisions to this end taken today. “These are groups of customers for whom grants will be most effective and for whom loans will only help in exceptional cases,” said Schleweis.