Even after around a decade of the ECB’s policy of low interest rates, the majority of private banking customers are retaining security-oriented investments. This results in a deposit surplus at many banks. With GenoFestgeld, MünchenerHyp has developed a product in 2018 that offers advantages to customers and banks.

Bank customers in Germany prefer to collect interest on their savings. Experts estimate that around 60% of investors are so conservative that only fixed income deposits are eligible. This poses a challenge for banks, as they have had to pay 0.4% interest on deposits to the ECB for years. However, banks are reluctant to recoil from the negative interest rate - they fear that in such a case they will permanently lose their security-oriented customers. Not to mention the fact they could potentially lose their reputation.

Then again, low interest rates have boosted demand for property and property finance. This has benefited partners for property finance such as MünchenerHyp. As a partner for cooperative banks, it has greatly expanded its new business in recent years. However, this also increased dependence on the capital market, as the bank refinanced itself primarily by issuing Pfandbriefe and unsecured bonds.

GenoFestgeld supports all those involved

In the search for a diversification of the refinancing mix, the focus was on fixed-income deposits of the cooperative banks. Win-win situation: The local cooperative banks can use the GenoFestgeld to reduce deposit surpluses and generate commission income, customers receive a return on their investment, MünchenerHyp extends their refinancing options and customers’ money and thus liquidity remain with the Group.

GenoFestgeld is implemented in line with the cooperative division of labour via the private customers’ house bank. Between EUR 10,000 and EUR 100,000 can be invested at attractive interest rates every month for one year. GenoFestgeld has been provided on a long-term basis in ongoing tranches since the spring of 2018; the volume of deposits raised has developed very positively.

New products

At the start of 2019, MünchenerHyp started to expands its services. Since January, in cooperation with the Savedo.ch interest rate portal, it has offered a fixed-term product in Swiss francs with two terms: at 12 months, the interest rate is currently 0.1%, at 24 months it is 0.2%.

MünchenerHyp is currently developing a new product for private customers of German cooperative banks looking for a short-term capital investment with good interest rates. This is expected to be launched later this year.