Corona balance sheet: Millions of losses & “bad loans” in state aid

In the corona pandemic, the federal government helped companies out in the crisis with sums of billions – for example through loans from the Reconstruction Loan Corporation (KfW).

Business Insider has an internal report from the Federal Ministry of Finance. It contains the balance sheet of many of the corona aid issued by the federal government in the form of loans.

The report shows: The sum of failed repayments to the state is already more than 330 million euros – in addition, there are “bad loans” amounting to hundreds of millions more euros.

In order to mitigate the consequences of the corona crisis for employees and companies, the federal government has made hundreds of billions of euros available in tax money since March 2020. The state granted dozens of loans through the Reconstruction Loan Corporation (KfW), but also took on guarantees or invested in companies.

An internal paper from the Federal Ministry of Finance now shows for the first time how much government aid is missing and how much credit the taxpayer is left with. In total, the federal government counts defaults of around 330 million euros in credits and loans by September 30th. In addition, there are 1,533 loans which the ministry classifies as so-called “non-performing loans”. This is understood to mean “bad loans”, which means that there is a risk of arrears or defaults. Total here: around 686 million euros.

The bottom line is that the federal government expects that around one billion euros in corona aid will not be repaid or that some parts have even failed.

Loan defaults and “bad loans”, especially with KfW aid

The paper shows that there were payment defaults in the KfW special programs 2020 in particular. In total, the federal government made up to 150 billion euros available for this, but only 45.5 billion were called up. The total of the “bad loans” amounts to 650 million euros. In addition, payments totaling 91.4 million euros have already been canceled. From budgetary circles of the grand coalition it is said that corresponding defaults are “expected” given the size of the loan amounts granted.

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Loan defaults also with large guarantees and start-up aid

Further losses in the millions can be found in the large guarantees issued by the state during the Corona crisis. With a commitment volume of 877 million euros, there are already payment incidents of 75 million euros. In addition, there are 35.75 million euros in “bad loans”. More than every tenth euro awarded has not been repaid or threatens not to be repaid in the case of large corona guarantees.

There were also losses in the millions of dollars in trade credit insurance issued by the state. This is insurance for suppliers whose goods are not paid for by the customer – and who are left with their financial advance payments. In this section of the corona aid, payments in the amount of 164 million euros have already failed. Further costs for the taxpayer can be found in aid given by the federal government specifically to start-ups: 375,000 euros of these loans were not repaid.

The balance sheets for the so-called bridging aid – the total disbursement now amounts to around 700 billion euros – are not listed in the report of the Ministry of Finance. The paper presented to Business Insider is limited exclusively to KfW loans, large guarantees, trade credit insurance, start-up loans and certain financial instruments from the Economic Stabilization Fund (WSF).

In the case of the latter, no “bad loans” or defaults are noted, but there is a footnote in the paper: “A possible need for depreciation is recognizable, but cannot yet be quantified at this point in time.” This means that even with the coronavirus issued by the WSF Help still threaten payment defaults. In total, the federal government supported 21 companies with a total of 8.7 billion euros through the fund. Among the recipients of money are Lufthansa, Tui AG – and A-Kaiser GmbH.

The company from Passau received 12.5 million euros from the WSF in January, but only six months later it went bankrupt. The Landshut public prosecutor’s office has been investigating suspected subsidy fraud since September. It is quite possible that the million payment to A-Kaiser will soon be listed as a credit default in the balance sheets of the Federal Ministry of Finance.

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