Volksbank in Thuringia
Security fund steps in at “Effenberg Bank”.
March 27, 2024, 1:55 p.m
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Footballer Effenberg is said to have once advised a Volksbank in Thuringia – which generously distributed money to professional clubs in the first two football leagues. That went wrong. Now the bank is getting help from the other cooperative banks.
The ailing Volksbank Bad Salzungen Schmalkalden is receiving support from the security fund of the German cooperative banks. The bank’s administrator Christian Gervais, appointed by the financial regulator (BAFIN), explained that its customers’ deposits and cooperative shares were safe at an extraordinary general meeting in Erfurt. The meeting initiated by the members of the cooperative bank was not public – almost 2,300 members were present or represented by proxy.
The small bank’s difficulties had also caused interest outside of Thuringia because it was sometimes referred to as the “Effenberg Bank”. The former professional footballer Stefan Effenberg is said to have acted as an advisor to them at times when it came to loans to football clubs. Several clubs in the first and second Bundesliga are said to have been customers. Loans are said to have been granted in some cases without sufficient collateral. The bank also speculated on foreign transactions, for example in Greece, as the ARD reported.
The bank’s difficulties arose from a massive need for value adjustments on loans, real estate and investments, explained Gervais, who was sent by Bafin at the end of 2023 as a special representative with a management function to VR-Bank in southern Thuringia.
Customer deposits are protected up to 100,000 euros
By the time the problems became known, the Volksbank, headquartered in Bad Salzungen, said it had almost 51,000 customers with total assets of around 1.5 billion euros. The security funds of the banks in Germany serve to ensure that financial institutions in financial difficulties receive help in order to avert insolvency.
In every member state of the European Union, national deposit protection systems guarantee that up to 100,000 euros per customer are protected per bank. In addition to this legal protection, almost all financial institutions in this country provide additional protection for savings.
According to the Volksbank, there was no approval at the general meeting of an amendment to the statutes, according to which decisions on real estate transactions worth ten million euros or more should be made dependent on the approval of the general meeting. Gervais explained that this would have made the necessary restructuring of the bank much more difficult. He viewed the meeting as a “step towards normalizing and securing the future of VR-Bank Bad Salzungen Schmalkalden”. A new supervisory board was elected to replace the one who resigned in December.