The Federal Council wanted to sweeten the abolition of the credit ban by privatizing Postfinance. It’s good that the Council of States didn’t swallow the candy.
Postfinance will not be separated from the postal group and privatised.
Politicians will not solve Postfinance’s problems. The banking subsidiary of the postal group will not be allowed to grant any loans or mortgages in the future either. The Council of States does not want to hear anything about lifting the legal ban. He did not respond to a corresponding proposal from the Federal Council on Tuesday. With the unanimous decision of the Council of States, the change in the law is effectively off the table.
At first glance, this is a slap in the face for postal minister Simonetta Sommaruga. Appearances are deceptive. In order to break the resistance of the bourgeois camp to entry of the “state bank” into the credit and mortgage market, the government packed an additional element into the law revision after the consultation: the privatization of Postfinance. This was hardly at the top of the SP Federal Councilor’s list of priorities. The privatization was intended as a treat to make the abolition of the credit ban palatable to the bourgeoisie.
There was a catch: the lending ban was to be lifted immediately after the law came into force. The Federal Council, on the other hand, only wanted to initiate privatization “in due course”. In a transition phase, an indirectly federally owned bank would have entered the credit market. The government justified the phased approach with the urgency. If the credit ban is not quickly abolished, there is a risk that Postfinance will become a restructuring case.
The bank is particularly suffering from the low interest rates. Because, unlike “ordinary” banks, they are not allowed to grant loans, the interest income on the investment side is virtually predetermined. It invests most of its assets in bonds. With the historically low yields, this business model hardly works anymore. The interest margin has eroded. The bank therefore sees itself forced to drive away unprofitable customers with “credit fees”. In 2021, she lost customer money amounting to 13 billion francs.
According to the Federal Council, exemption from the credit ban is a prerequisite for privatization. Otherwise, the Post subsidiary would not be attractive enough for investors. That may or may not be true. Only: Postfinance’s success in the mortgage business would by no means be guaranteed. If no buyer can be found for the bank at the same time as the lending ban is lifted, there is little reason for optimism. In plain language, that would mean that the federal government would assume risks that private buyers do not want to bear.
In the worst case, the federal government would be forced to keep the bank in indirect ownership for years to come. The predictable line of argument: premature privatization would destroy “national wealth”. It is therefore better to feed Postfinance under state care. This is also in the interests of taxpayers. In short: the Federal Council’s proposal had the potential for a “never ending story”.
There is no need to have any great illusions about the motives of the bourgeois opponents of the proposal. Some may have primarily been concerned with protecting “their” cantonal banks from additional competition. For the Ratsleft, on the other hand, privatizations are unpalatable as a matter of principle. One could therefore say that the Council of States made the right decision for the wrong reasons.