Rent cover in Berlin: Volksbank puts investments on hold - Berliner Morgenpost
Berlin. & Nbsp; Berliner Volksbank is investing in its own portfolio of apartments on hold due to the planned red-red-green rent cover in Berlin. The CEO of the cooperative bank, Carsten Jung, said this to journalists on Monday.
"We held back around 1.4 million euros this year, which we would otherwise have invested in the renovation of our apartments," he said. The rent cover decided in the German capital by the red-red-green Senate therefore increasingly unsettles investors.
Jung justified the postponed restructuring with the low prospect of refinancing the investments and with the legal uncertainty currently prevailing. Berliner Volksbank claims to have around 2,000 apartments in the German capital.
The expenses planned for the renovation of own residential properties in the coming year are by no means certain, said Jung. In 2018, the Volksbank had invested more than four million euros in the renovation of its Berlin portfolio. According to Jung, the bank calculates the cost of renovation for each residential unit at around 20,000 euros. "We're not talking about luxury refurbishments," he said. However, he sees little chance of refinancing the expenses through the rent cover.
The Berlin Senate had launched the nationwide rental cover last week. By law, the coalition wants to freeze rents for around 1.5 million apartments completed before 2014 for five years. There are also upper limits for new rentals and limits for existing rents. The legality of the rental cover is controversial. The opposition has already announced that it intends to sue the planned rent regulation.
Berliner Volksbank boss Jung therefore sees a phase of uncertainty for landlords and apartment owners in Berlin. Part of the Volksbank business is also the financing of renovation work. Customers are the Berlin cooperatives, private customers, but also smaller craft businesses.
The economy in particular needs reliable framework conditions, said Jung. "We have already noticed that our customers are initially reluctant to invest in this area," he said.
The Volksbank itself had invested heavily in residential real estate in recent years, also to be able to compensate for the decline in interest income. Between 2014 and 2019 alone, the cooperative bank had lost around 50 million euros in interest income, complained Jung. One reason for this is the persistently low interest rate environment. It was only in September that the bank announced that it would request negative interest of 0.5 percent from a certain amount on newly opened accounts from October.
While private new customers have to pay the negative interest from 100,000 euros, the limit for new commercial customers is 500,000 euros. According to the Volksbank, the penalty interest does not refer to the entire deposit, but only to the part that exceeds the exemption.
Jung announced a “decent result” for the current financial year. In the past financial year, the Berliner Volksbank had an annual surplus of EUR 21.1 million, of which EUR 16.8 million was distributed to the members of the cooperative as a dividend. With regard to the dividend, Jung also announced an "attractive offer" for 2019.
The challenges for the Berliner Volksbank are still huge, said Jung. In addition to the low interest rate phase, digital change and changing customer behavior are putting the money house under pressure. The bank therefore began to thin out its branch network some time ago. While there were 75 in 2017, the number of branches is currently 58. This was accompanied by a reduction in staff. The institute currently employs around 1,700 people in Berlin and Brandenburg, and more than 2,000 people worked for the Berliner Volksbank before the austerity measures started.
Even if fewer and fewer customers visited the branches, it was important for the Volksbank to continue to be present in the city, said Jung. However, it has not yet been finally clarified which and how much service the institute will still offer in its branches in the future.
From January his house will test the so-called "Berliner Volksbank Shops", said Jung. The CEO announced that a basic range of services would then be available at the comparatively compact locations. First, there should be two of these shops across the city.
With regard to the supply of cash in the shops, Jung announced different concepts. So no ATM should be set up at a shop. More and more people are using the smartphone for payment processes, said Jung. "It is reasonable to assume that the importance of cash is declining," he said. A dense supply network with ATMs is no longer a unique selling point, says Jung. With regard to cash supply, he believes it is possible to work with competitors in this area in the future.