So-called zombie companies are companies that should actually be bankrupt in the wake of the corona crisis. But there is still state aid and companies do not have to file for bankruptcy until the beginning of 2021. But how many zombie companies are there? Opinions vary, according to Sandra Pfister from the Dlf business editorial team.
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The question of how many such zombie companies there are is important because they are directly related to the banking sector. If the companies cannot repay their loans to the banks, this can endanger the financial institutions themselves.
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Opinions differ on how many zombie companies there are and how much the banking sector could be affected.
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- The private and corporate institute of the German economy warns that there could be more and more zombie companies.
- Felix Hufeld, head of the Federal Financial Supervisory Authority (Bafin), also expects the first wave of loan defaults to hit the banks in early 2021. That’s what he says the Handelsblatt.
- There are also reminders from science: The Leibniz Institute for Economic Research in Halle predicts that dozens of banks and savings banks could become insolvent due to the Corona crisis. Among the cheapest calculations, it affects 6 percent of banks in Germany.
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Not all of them assume a banking crisis
Others see the situation as less threatening.
- The Frankfurt School of Finance, for example, doesn’t believe there are that many zombie companies. Because before the outbreak of the pandemic, the economy was doing well for years. The private business university speaks of a maximum of a dozen companies that could conceal the fact that they do not have a functioning business model.
- Others assume that bankruptcies are to be expected above all in retail or restaurants and pubs. But these companies mostly get their loans from savings banks and cooperative banks: And these are precisely the banks that cannot go bankrupt, because they belong to the municipalities and thus de facto to the state. “A lot has to happen before they really end,” says Sandra. In addition, banks only lend a fraction of their money to restaurateurs, hoteliers and so on.
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“Many say there won’t be a banking crisis like the one in 2008 when the state had to step in.”
Sandra Pfister, Dlf business editor
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Most forecasts do not anticipate a crisis like 2008, also because banks have built up more equity over the past ten years. They increasingly got rid of customers who could no longer service their loans. In addition, the banks have set up a fund, just as an apprenticeship from 2008. Banks can get money from this money pot during the crisis.
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But in addition to the banks, there are numerous so-called shadow banks, i.e. hedge funds, money market funds or insurers. These are little regulated, although they have multiplied their credit volume. It would be just as important to take a closer look at these providers, says Sandra.
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