Second contribution date strengthens role of Sparkassen in midcap Business
The current Sparkassen Credit Basket XIV (S-KB XIV 2017), at EUR 600.7 million, has almost reached the record volume of S-Credit Basket XIII (2016: EUR 674.5 million).
A second contribution date in May 2018, which will be offered for the first time, could see a further rise in the volume of the credit pool of up to EUR 120 million and thus lead to a new record pool. The number of participating Sparkassen rose by 6 to 83 institutions, representing a new all-time-high. So far, the current pool consists of 300 individual counterparty risks of a maximum of EUR 7 million each, which is the best level of portfolio granularity ever achieved. This development demonstrates that credit pooling among Sparkassen has become established as a crucial instrument for diversifying and minimising risk and reinforces the role of the Sparkassen as a partner of the “Mittelstand”, midcap companies that form the backbone of the German economy.
The launch of S-KB XIV marks the first time it has been possible for Sparkassen to take advantage of two dates within the space of a year (November 2017 and May 2018) in which they can transfer their counterparty risks to the basket. This provides Sparkassen with even more flexibility in organising their lending activities to midcap companies since the likely waiting period until hedging becomes effective is halved.
This year, the transaction is once again being arranged by BayernLB, Helaba, HSH Nordbank, LBBW, NORD/LB and SaarLB, with support by the regional Sparkassen associations and the German Savings Bank and Giro Association (DSGV). BayernLB and Helaba will handle the administration of the credit basket.
In the scope of the credit basket, Sparkassen transfer counterparty risks by means of credit derivatives made up of large corporate credit exposures into a portfolio and, in return, purchase this diversified portfolio on a pro-rata basis. Any possible defaults of credit risks are thus no longer borne by individual Sparkassen but, instead, proportionately by all participating Sparkassen – fully in keeping with the principle of mutuality. The client relationship is completely unaffected by this mechanism. This allows Sparkassen to provide loans to midcap companies and industry in a more effective way, without assuming any concentration risks. Credit basket transactions represent an ideal combination between the advantages of the regional principle – being close to customers and understanding their needs – and a national presence. Preparations for the next S-Credit Basket will being in the near future.
Press Contact at Helaba
Mike Peter Schweitzer
T +49 69/91 32-21 92
Press Contact at BayernLB
T +49 89/21 71 21 306