The interest rate turnaround poses challenges for cooperative banks. Regional banks are now required to take adequate account of the changed and volatile interest rate level when strategically aligning their treasury positions and defining their liability management strategy. They are well-advised to be cautious, particularly in view of the possible implications for loss-free valuation pursuant to IDW BFA 3 and with regard to competition for customer deposits.

The ongoing implementation of regulatory initiatives is currently putting cooperative banks to the test and will continue to do so in the future. The new MaRisk amendments in particular are bringing about new requirements. The focus in the coming years will be on transposing the EBA guidelines for lending and credit monitoring into German law, integrating ESG requirements from strategy to overall risk management and the management of interest rate and credit spread risks.

The topic of ESG is becoming increasingly important in public debate as well as in integrated performance and risk management. Cooperative banks are confronted with an increasing number of regulatory requirements. In addition, due to their proximity to their customers they play a key role in achieving the goal of climate neutrality.

Furthermore, managing potential bottlenecks remains a relevant area of action for cooperative banks. In recent years, strong credit growth and the increase in risk weights resulting from the CRR III have been highlighting the importance of capital management. Another essential topic is the management of economic risk coverage potential, which has gained in importance in the wake of the establishment of the economic perspective on risk-bearing capacity and the sharp rise in interest rates in 2022 and 2023.

Cooperative banks are facing the challenging task of setting up their integrated performance and risk management in a future-oriented way that allows them to adapt to the constantly changing needs of bank management. To date, many cooperative banks do not have a sufficiently flexible infrastructure, and their management methodology is lacking agility. As a consequence, they are not capable of reacting to market changes, new regulatory requirements and internal deviations from targets. The key to long-term competitiveness lies in the effective further development of integrated performance and risk management and the implementation of data-driven management methods. Demographic change has an impact as well: bank management should aim to develop measures to counter a potential shortage of skilled workers. 
 

zeb supports cooperative banks with customized solutions tailored to the individual institution as well as with standard formats. Here are some examples of the challenges outlined.