"Effenberg" bank will probably have to be rescued
Value adjustments in the real estate business have resulted in a loss of millions for Volks- und Raiffeisenbank Bad Salzungen Schmalkalden for the financial year. For one of the bank's advisors, it is only a matter of days before the protection fund has to intervene. It is then conceivable that the bank will cease to be independent.
According to a consultant, Volks- und Raiffeisenbank Bad Salzungen Schmalkalden may soon have to be supported by the protection fund of the cooperative banks. "That will probably happen in the short term," said lawyer Edgar Steinle, who advises the Supervisory Board of the Thuringian bank. A decision on this is more a matter of days. The annual results for 2022 are currently still being audited. The financial statements have not yet been certified by the auditors. Due to value adjustments in the real estate business, the loss for 2022 is likely to be in the single-digit millions, Steinle said. The bank declined to comment on this.
A few years ago, the bank from south-western Thuringia hired former national soccer player Stefan Effenberg. It grants loans to professional clubs and therefore became known as the "Effenberg Bank". The bank is currently making other headlines. Stefan Siebert, the bank's longstanding CEO, resigned last week and, according to insiders, the current CEO Jan Wettstein also resigned. The German Federal Financial Supervisory Authority (BAFIN) has been in dispute with the bank for some time and recently demanded that the Thuringian bank hold significantly more equity capital, according to several insiders. BAFIN did not comment on this.
The protection scheme of the cooperative banks ensures that banks in difficulties do not become insolvent. Instead, they receive aid from a solidarity-based financial pot into which all institutions pay. This then steps in to provide so-called institutional protection and resolves financial problems. After receiving support, the banks are often merged with a neighboring Volksbank. This could also happen at VR-Bank Bad Salzungen Schmalkalden. "It cannot be ruled out that the bank will enter into exploratory talks on a merger with another cooperative bank from the region in the short term," Steinle told Handelsblatt. The Federal Association of German Cooperative Banks (BVR) declined to comment on the matter.
The protection fund of the cooperative banks might need to intervene to support Volks-und Raiffeisenbank Bad Salzungen Schmalkalden, given the anticipated single-digit million-euro loss due to real estate value adjustments. In such a scenario, the Federal Financial Supervisory Authority (BAFIN) has suggested that the bank strengthens its equity capital significantly.
Source: www.ntv.de
