According to the BGH ruling: Volksbanks rely on the convenience of their customers

Customers of the Volks- und Raiffeisenbanken, who have paid excessively high fees to their current accounts in the past few years, have to see to it that they get them back themselves.

The Federal Court of Justice (BGH) ruled in April that the banks could not increase their fees as usual and that the silence of their customers should be interpreted as approval.

In this way, customers could reclaim increased fees from the past three years.

The Volks- und Raiffeisenbanken had advised their customers that the corresponding clauses in the general terms and conditions were ineffective and were now looking for new solutions bilaterally, said Gerhard Hofmann, member of the board of their Federal Association (BVR) at a press conference on Tuesday. The overpaid fees would not be automatically reimbursed. Customers who think they have paid too much have to prove and claim it themselves. In each individual case, these are "not huge amounts", but there is "a lot of paperwork". Accordingly, Hofmann does not expect too many reclaims.

The banking supervisory authority Bafin had already estimated shortly after the ruling was announced that the possible repayments in the worst case could cost the banks up to half an annual profit.

Deutsche Bank recently spoke of provisions and earnings losses totaling around 300 million euros in the second and third quarters.

Hofmann now said that the BVR is not assuming the size of its own member institutes that the Bafin had brought into play.

Considerable burden from retroactive effect

Nonetheless, the top of the association criticized the fact that court judgments have recently been made more frequently with retroactive effects on previous years. Banking for a wide range of customers required standardized regulations in order to provide high-quality services, said BVR President Marija Kolak. "This claim is thwarted by the ever more frequent changes in case law," she said. "Since the retroactive effect of the judgments is not restricted, this leads to a considerable burden in the banking industry."

Hofmann spoke of a "climate of legal uncertainty" that is bad for Germany as a business location. "Changes to the legal position by the supreme courts should have future effects, but not indefinitely," said Kolak. She pleaded to the legislature to enable practice-oriented and mass-appropriate contract adjustment mechanisms. After all, the BGH ruling does not only affect the banks. Rather, it could possibly also be transferred to energy suppliers and other industries.

For the past year, the cooperative financial group reported a consolidated profit before taxes of 7.2 billion euros, which is significantly less than 10.2 billion euros in the previous year. In addition to the Volksbanks and Raiffeisenbanks, the group also includes affiliated companies such as DZ-Bank and R + V-Versicherungen. The decline in earnings is primarily due to a significant increase in provisions for credit risks in the corona pandemic from EUR 800 million to EUR 2.3 billion.

The feared wave of insolvency after the suspension of the obligation to file for insolvency has not yet materialized, according to Hofmann: "According to the current data, we are assuming a milder course of loan defaults than planned," he said. This can be seen, among other things, in a stable rate of loans at risk of default of 1.48 percent. In addition, the pandemic-related loan deferrals would continue to decline. In the meantime, deferrals still apply to 0.6 percent of the loan volume. That is a decrease of 84 percent compared to spring 2020. His board colleague Andreas Martin warned at the same time that rising insolvency figures are to be expected, "which will be reflected in higher, but manageable loan defaults".

Despite the persistently low interest rates, the Volks- und Raiffeisenbanken were able to increase their net interest income slightly in 2020. On the one hand, this was due to the fact that the institutes were able to further expand their real estate financing. On the other hand, however, more and more cooperative banks are charging their customers negative interest in order to compensate for the penalty interest that they themselves have to pay for deposits parked at the European Central Bank (ECB). Kojak appealed to the ECB to "relegate the negative interest rate back to the central banks' bag of tricks if the upswing stabilizes".