German cooperative and Raiffeisen banks plan to strengthen rules for their rescue mechanism after three of them required a note injection in 2024. “Our solidarity community should not be a free pass for risky business” said the president of the Federation of German Cooperative and Raiffeisen Banks (BVR), Marija Kolak, to the “Handelsblatt”.
The clear goal is to exclude potential failures at individual institutions even more effectively in the future. “We will further develop the institution’s insurance” said Kolak. There is a “broad majority” in favor of changes to the existing system. In the past year, the cooperative financial group had to absorb risks of almost 500 million euros through the BVR’s security mechanism at three banks, an unusually high sum.
Among other things, the cooperative banks plan to look more closely in the future at an institute that does not allow its books to be controlled by the cooperative auditing associations. In such cases, the association plans to impose additional special conditions through its security mechanism. “One option is additional special audits” said Kolak.
A better information exchange between the “responsible actors” is also to be established. This is intended to prevent crisis banks from financing themselves unhindered through the top bank, DZ Bank. “It should not happen that a bank that has already taken many risks and is under the observation of the security mechanism can acquire additional liquidity and thus the potential for even more risks through the DZ Bank” said Kolak.