According to Ifo Supervisory Boards of public banks less competent than at Private banks
The supervisory boards of public-law banks in Germany are less competent in terms of expertise, according to the Ifo Institute. "There are numerous studies that show a correlation between the expertise of supervisory boards and the economic success of banks," explained Marcel Thum, head of the Ifo Dresden branch. "More expertise in the supervisory boards of public-law banks could help in handling future crises better."
Already after the financial crisis 2008/09, the authors published a study on the same topic. Since then, the supervisory boards of public-law banks have caught up significantly, but they still lag behind in comparison to private banks, according to the Ifo. "The gap between the supervisory boards of public-law banks and private banks is particularly large in the areas of financial market competence and experience in management," said Thum.
The evaluation of expertise is based on the personal educational background, management experience, and financial or banking market experience of individual members in the supervisory boards between 2008 and 2023, according to the Ifo. The study covers a total of 17 banks in Germany, of which nine are privately organized and eight are public-law institutions. Among them are eight of the ten largest German banks according to their balance sheet total.
During the financial crisis, many Landesbanken were under heavy pressure and had to be rescued with capital injections from their state shareholders in some cases. No statements from the industry associations DSGV and VOEB could be obtained on the Ifo study at first.
- Despite the significant improvement since the 2008 financial crisis, the Ifo Institute Still suggests that private banks have fewer gaps in financial market competence and management experience on their supervisory boards compared to public-law banks.
- Marcel Thum, head of the Ifo Dresden branch, asserts that if the expertise of supervisory boards in public-law banks had been improved, they might have handled future crises more successfully, like what was observed in private banks.
- According to the Ifo's evaluation, the supervisory boards of private banks had more members with relevant educational backgrounds, management experience, and financial market experience compared to their public-law counterparts between 2008 and 2023.
