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Impact of the 2022 interest-rate shock on cooperative banks in Germany – a case study
Vierteljahrshefte zur Wirtschaftsforschung, Vol. 92 (2023), Iss. 2 : pp. 85–100
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Andreas Bley, Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (BVR)
- Andreas Bley, Dr., Chefvolkswirt, Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V., Berlin. Herr Dr. Andreas Bley leitet die Abteilung Volkswirtschaft/Mittelstandspolitik beim Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (BVR) in Berlin. Dort ist er unter anderem für die Analyse und Prognose konjunktureller Entwicklungen und der Finanzmärkte sowie für Fragen der Geldpolitik und der Mittelstandspolitik zuständig. Vor der Tätigkeit beim BVR war er von 1997 bis 2001 bei der Landeszentralbank in Berlin und Brandenburg, Hauptverwaltung der Deutschen Bundesbank, in Berlin tätig. Seine Promotion zu einem arbeitsmarkttheoretischen Thema hat er 1999 an der Freien Universität Berlin abgeschlossen, wo er von 1993 bis 1997 als wissenschaftlicher Mitarbeiter am Institut für Wirtschaftstheorie beschäftigt war.
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Abstract
Between July and December 2022, the European Central Bank (ECB) raised its key interest rate by a very substantial 250 basis points. This interest-rate shock presented the German cooperative banks as well as many other credit institutions with huge challenges. The cooperative banks suffered a significant hit to their income, mainly in the form of high fair value losses in securities portfolios following the interest-rate shock and, to a much lesser extent, in a deterioration of fair value gains and losses in the lending business due to the faltering economy. Nonetheless, the cooperative banks delivered a strong operating performance and strengthened their capital base. Over the medium term, the return to positive interest rates should create a tailwind for financial performance. In the coming years, reversals of impairment losses should generate favorable effects as most securities are held to maturity. A key factor for future operating performance will be the trajectory of capital investment in Germany going forward.