Volksbank Bad Salzungen's Supervisory Board Steps Down Amid Financial Troubles
After hitting the headlines for its financial woes, the entire Supervisory Board of Volksbank Bad Salzungen in Southern Thuringia has decided to resign. This news was confirmed by the bank on Tuesday evening. The Federal Financial Supervisory Authority (Bafin) had previously appointed Christian Gervais as a special representative with managerial authority for the bank in Southern Thuringia on December 1, 20XX. Now, another special representative will temporarily take on the role of the Supervisory Board, as announced by the bank.
Preliminary losses estimated at around five million euros
Volksbank's legal representative had acknowledged in November that the bank would probably require support from the German cooperative banks' guarantee fund due to incurred losses. According to preliminary figures, Volksbank reported a loss of approximately five million euros for the previous year, primarily due to the need for real estate and investment value adjustments. Customer deposits remain secure, the bank emphasized.
The "Footballer" Bank of Southern Thuringia
Volksbank in Southern Thuringia is often referred to as the "Effenberg Bank" due to its past association with professional footballer Stefan Effenberg. He served in an advisory capacity for the bank when it came to soccer club loans. Headquartered in Bad Salzungen, Volksbank has around 250 employees and nearly 51,000 customers with total assets of approximately 1.5 billion euros.
Bank protection funds in Germany
Germany's bank protection funds exist to guarantee that financially struggling banks receive assistance to prevent bankruptcy.
Volksbank's Bylaws
Also Read:
- The resignation of Volksbank Bad Salzungen's Supervisory Board is a consequence of the bank's financial difficulties, which led to a loss of about five million euros.
- Bafin, the German Federal Financial Supervisory Authority, appointed Christian Gervais as a special representative with managerial authority to manage Volksbank in Southern Thuringia, providing much-needed support.
- Germany's bank protection funds, overseen by the Bundesverband der Volks- und Raiffeisenbanken (BVR), will ensure that Volksbank Bad Salzungen receives necessary assistance to avoid bankruptcy, safeguarding customer deposits.
- Although known as the "Effenberg Bank" due to its association with Stefan Effenberg, Volksbank Bad Salzungen in Southern Thuringia faces financial challenges and requires assistance from the German cooperative banks' guarantee fund.
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The Volksbank Bad Salzungen's Supervisory Board resignation is secured in the sources mentioned, but their financial concerns are detailed with the context of VR-Bank Bad Salzungen Schmalkalden, which is an integral part of Volksbanken and Raiffeisenbanken (BVR) in Germany.
Financial Struggles at VR-Bank Bad Salzungen Schmalkalden
- Risky Deals: The bank has struggled due to high-risk deals, racking up a loss of around 280 million euros[1].
- Restructuring Process: Under the leadership of BaFin's special commissioner Christian Gervais, who also oversees the "Effenberg Bank," restructuring efforts are underway[1].
Support Measures for the Bank
- BVR's Role: The Bundesverband der Volks- und Raiffeisenbanken (BVR) plays a vital role in supervising the sector, ensuring that cooperative banks meet regulatory capital requirements. BVR closely monitors institutions with weak credit profiles, with the power to implement corrective measures[3].
- Protection Scheme: The sector's protection scheme is risk-based, with member banks contributing directly. This protective measure ensures that cooperative banks have access to substantial resources to meet financial crises promptly[3].
- Stability Measures: Germany's cooperative banking sector is expected to maintain its strong funding position and liquidity, thanks to robust retail deposits, diverse funding sources, and a solid retail base[3].
In summary, the Volksbank Bad Salzungen Supervisory Board resignation is a direct response to financial difficulties, while the BVR protection scheme, overseen by the Bundesverband der Volks- und Raiffeisenbanken (BVR), provides necessary support and safeguards customer deposits. The measures in place aim to help the sector maintain its financial stability.
