Sanctions Do Not Affect Russian Companies, But German Savers

Sanctions against Russia are hitting German savers who trusted the words of their chancellor and heeded his call.

“Employee participation is a way of giving working people their fair share of the wealth generated in companies and in society. Co-determination and participation in productive assets also help to better understand and endure the rapid changes in the economy and society,” said the then Federal Chancellor Gerhard Schröder (SPD) on the occasion of the 50th annual conference of the Working Group on Partnership in Business in his speech on the subject of “Employee Participation – The dawn of the third millennium” on March 28, 2000.

Sanktionen treffen nicht russische Unternehmen, sondern deutsche Sparer

Those who believed his words are left behind today: “What we all have to want together,” said the Federal Chancellor at the time, “is that we get a social, an economic culture in this country, where more and more people contribute to this aspect of old-age security, but also in the acquisition of assets, not only build, but actively participate in it.”

His words sounded convincing: “We still have the situation where the richest 10% of households own around 50% of private wealth, while the bottom half of society only owns around 4% of private wealth. I say that without a hint of jealousy, and I’m not advising anyone to do so either. I’m just advising everyone to help change that.”

Anyone who has now taken part and bought shares in companies in which the Federal Chancellor stood for credibility with his name is now at a disadvantage. As Chairman of the Supervisory Board of the Baltic Sea pipeline operator Nord Stream AG and the mineral oil and gas group Rosneft (both Russian state-owned companies), the reputation of the former German Chancellor stood for the good governance of these companies.

As late as February 4, 2022, the German “tagesschau” reported: “Ex-Chancellor Schröder already has important positions at Nord Stream AG, Nord Stream 2 AG – and at the Russian energy company Rosneft. Now he should also be on the supervisory board of the state-owned company Gazprom.”

Now, however, bank customers are being informed about the illiquidity of their savings at a time when, on the one hand, the stock market crash is decimating their equity assets, and on the other hand, the inflation rate has risen to the highest level of this new millennium and more and more people will be dependent on their savings, on their last reserves.

In addition to the real destruction of wealth through inflation, there is now the elimination of the possibility of selling their assets. Since the shares can no longer be traded, they also fail as collateral for any type of loan. Only what can be used by the bank in the event of payment difficulties can serve as security.

The sanctions against Russia and here specifically against the shares, with which the former Chancellor was able to encourage Germans to invest in productive capital, do not affect the sanctioned companies – Gazprom or Rosneft do not notice whether their shares change accounts in Germany or not – , but those who invested their savings in trust in the credibility of German politics.

It is in the nature of the stock exchange as a secondary market that the companies whose shares are traded cannot receive a direct payment from transactions on the stock exchange. If the sanctions were limited to the primary market – ie the market for the issue of shares – the economic nonsense of these political measures would at least be limited, because the issuing companies actually receive capital from proceeds on the primary market.

Example Commerzbank, which writes to its customers on April 22, 2022: “We would like to inform you that the following securities held in your custody account are affected by sanctions in connection with the Russian invasion of Ukraine”. What follows in Commerzbank’s letter is a list of the securities holdings with custody account number, ISIN and security designation. Gazprom PJSC (US3682872078) and Rosneft Oil Company (US67812M2070) are among them. As it is, however, the damage for German savers remains and the Russians remain unmolested.

The Federal Chancellor once spoke of the unequal distribution of wealth: “It can be changed, not least through participation in productive capital. Incidentally, productive capital here means not only the manufacturing companies, but also the service providers in the same way. There is still one, especially when it comes to productive wealth there is a huge need for private households to catch up: Only 11% of working-class households and 18% of white-collar households in West Germany own shares,” calculated the Federal Chancellor.

Anyone who followed his words with deeds now has de facto “nonvaleurs” in their portfolio, because the shares can no longer be sold, but are now used to make politics against Russia.

Commerzbank writes: “As a result of the sanctions, the securities concerned are currently no longer tradable. Commerzbank is therefore currently unable to execute orders in connection with the securities concerned.”

As early as March 15, 2022, bona fide shareholders could have guessed what disaster was in store for bona fide shareholders. Because the Commerzbank booked back the earnings credits that the shareholders of the mineral oil and gas group Rosneft were entitled to and which had been lawfully paid out. Income that had already been credited to the savers’ accounts on November 12, 2021 was withdrawn by Commerzbank – regardless of whether there were funds in the account or not.

“Wealth accumulation in the hands of employees brings us closer to the participatory society that we Social Democrats are striving for,” said the Chancellor when he was still in office.

Published by:

Dr. Oliver Everling

Independent since 1998, he is Managing Director of RATING EVIDENCE GmbH. As visiting professor of Capital University of Economics and Business in Beijing, former chairman of the supervisory board of a rating agency, advisory board member, advisor, member of rating committees, chairman of ISO-TC Rating Services, author or publisher of books and a magazine, Independent Non-Executive Director under EU Regulation on Credit Rating Agencies, he has been or is involved in ratings from a variety of perspectives. Previously, he was for 6 years department director at Dresdner Bank and, until 1993, managing director of the Projektgesellschaft Rating mbH after a doctorate at the banking and stock exchange seminar of the University of Cologne.

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