Corona crisis: BayernLB at the economy’s side

Bayerische Landesbank is there for its customers. The Bank is safe-guarding companies’ liquidity while helping the State of Bavaria on the capital market.

Munich – BayernLB is doing everything in its power to help its customers weather the massive economic impact of the Corona crisis. “In this extraordinary emergency situation we are standing by people and businesses in Bavaria and other parts of Germany,” said Stephan Winkelmeier, Bayerische Landesbank CEO, at today’s Annual Results Press Conference. “We’re doing our share in safeguarding the liquidity of companies being hit by the pandemic shock through no fault of their own. This is how we’re helping to keep economic structures healthy and strong and thereby save jobs.”

Subsidised loans: BayernLB experts anticipate up to 10,000 applications

Not only BayernLB’s relationship managers but most of all its subsidised lending experts are working nonstop to arrange loans and guarantees for companies that are being hit especially hard by the crisis. Working hand-in-hand with the Bavarian savings banks, they are seeing that subsidies from development banks like KfW Bankengruppe and LfA Förderbank Bayern reach Bavarian businesses. The Landesbank specialists are advising the savings banks on the programmes available and navigating them through the application process. They are also keeping close touch with many of BayernLB’s corporate customers, among these being large Mittelstand firms and listed companies.

There is an enormous interest in government subsidies to be seen in every corner of the economy. The specialists at BayernLB have already fielded well over four thousand queries since the Bavarian and national governments set up their subsidy programmes around two weeks ago. To ensure that processing runs swiftly and accurately, the Bank has in the meantime beefed up its subsidised lending team by, among other things, recruiting expert staff members from other units. There is no end in sight to the storm: BayernLB anticipates up to 10,000 applications from the Bavarian S-Finanzgruppe savings bank group in the weeks to come – all of which owing to the Covid-19 crisis. Bavaria’s savings banks and BayernLB have, to date, forwarded some 200 applications for nearly EUR 80m collectively to the development banks.

Helping the banking industry is the fact that the development banks have simpli-fied the application process in part. For example, loans of up to EUR 3m are not subject to their credit audit. Principal banks like BayernLB and the savings banks, however, are still required under supervisory law and for reasons of duty of care to conduct a credit check, despite the urgency of the situation. Only those companies with a sustainable business model and which were not in “financial difficulty” before the outbreak of the pandemic may receive a subsidised loan, emphasises KfW.

Emergency aid: BayernLB keeps funds flowing fast and reliably

In addition to facilitating loan subsidies, BayernLB is currently helping to sustain liquidity in the economy through swift transfers of emergency aid from the Bavarian state government and German federal government. These funds were made available to self-employed persons and small businesses on 18 March. The first payments were disbursed just two days later – via an account, among others, that the Free State of Bavaria keeps with BayernLB. More than EUR 300m has been transferred to the applicants through this account since. This is a major means of protecting the ability of many companies to meet their short-term obligations during the acute phase of the crisis, and thereby stabilising the economy.

A special bond: BayernLB issues multi-billion-euro instrument as Bavaria’s principal bank

BayernLB is also helping the Free State of Bavaria fund, through the capital market, the measures it has introduced for overcoming the coronavirus pandemic. The Bavarian government has borrowed EUR 3bn to this end over the past weeks. As its principal bank, BayernLB was a major issuer and mandated lead arranger of this bond. It is the biggest BayernLB bond ever to be issued.

Up and running: BayernLB is there for its customers

In order to help prevent its workforce from contracting Covid-19, BayernLB has been having the vast majority of its employees work from home for the past two weeks. The measure applies to all the Bank’s locations and for the foreseeable future. Customers nevertheless have access to all of BayernLB’s services. “We are there and up and running,” stressed Winkelmeier. Together with the Bavarian savings banks, Bayerische Landesbank is keeping its financial services afloat. The only roadblocks encountered by the Bank thus far have only been of a partial nature, namely breaks in delivery chains due to the pandemic. This at times affects the supply of physical notes and coins and precious metals, which BayernLB trades from within its Nuremberg location. Suppliers around the world are scaling down production, making certain products unavailable. As one of the few major traders in precious metals, BayernLB is still able to deliver; it has essentially traded more physical gold in March 2020 than in any other month.