Innovation welcome – just not at the savings banks
Michael Jackson may still be a controversial figure, but musically, he knew where change has to begin: „I'm starting with the man in the mirror.“ At the German Savings Banks Day in Nuremberg, however, it once again became clear why some things in Europe seem immovable. When it comes to the idea of a European banking and capital markets union, savings banks President Ulrich Reuter sees red.
Change? Not at our own institutions
While Reuter acknowledges that the country needs „new thinking“, he’s not willing to apply that to his own member institutions. The association, he says, will „take a clear stance“ against Brussels' plans for joint European deposit guarantee schemes. After all, he argues, the saving banks don't want „distant banking groups with global business models to be able to indirectly dip into our deposit protection funds.“ That’s isolationism – savings bank style. In the eyes of the Bavarian president of the German Savings Banks Association, it seems only his own group counts as solid.
That, of course, fits well with their municipal ownership structure – which is, in the literal sense, provincial. Bavarian state premier Markus Söder, also present in Nuremberg, likely felt very much at home. His sense of trust often ends at the state border, after all. Germany, he insists, must not be held liable for deposits in other European countries. „Hands off deposit insurance.“ The fact that Söder ranks savings banks and cooperative banks among the most reputable institutions in the sector may have amused some members of the Raiffeisenbank in Hochtaunus – that institution has run into trouble due to risky real estate dealings.
The EU would have never formed with that mindset
More broadly, it’s worth noting: with this kind of mindset, the European Union would never have come into being. Nor would NATO – a military alliance in which members pledge not just money, but potentially their lives for one another. So what would it take to prevent abuse of a European deposit insurance scheme? Clear rules and criteria for membership and admission.
But to even begin crafting such a framework, there needs to be a fundamental willingness to let go of the status quo. In this context, rigidity is out of place. The call for „new thinking“ did not come with a look in the mirror – but with a finger pointed at others.
