Foundation assets in jeopardy due to bank failure?

Foundation assets in jeopardy due to bank failure?

The news of the takeover of HSH (hamburgisch-schleswig-holsteinische)-nordbank by the US investors cerberus and james christopher flowers has startled city councilor klaus neuner (CSU). He cares about the liquid assets of the pastor norbert stang/paul herbst "schen foundation. By decision of the city council, a sum of 118,000 euros had been invested with this troubled institution in 2015.
Already in february 2000, the estate of pastor michael norbert stang and paul herbst had been combined and invested in the ebermannstadt senior center. Nine of the 73 apartments, which are intended to enable senior citizens to live independently within their own four walls, are owned by the foundation.
According to neuner, the original idea was to buy one additional apartment with the tenant lot and thus fulfill the foundation’s purpose. However, the foundation’s supervision did not play along here. A foundation fund has been requested in order to be liquid in the event of unforeseen renovation work. In addition, the statutes stipulated that every year at christmas, gifts were to be given to needy seniors. Money had to be available for this as well.
Until 2015, the foundation’s assets, which had grown to a rough order of almost 120,000 euros, were invested as a fixed deposit at a local bank (sparkasse). Due to the rapid development of interest rates, the city council instructed the administration to examine alternative forms of investment.
The choice fell on a product from HSH nordbank, which the bank’s financial advisor had recommended to the administration. The city council decided on 27. July 2015 to invest 118,000 euros with HSH nordbank at an interest rate of 0.84 percent. A decision that was made in agreement with the foundation supervisor of the district office.
"We had not done that", a member of the forchheim foundation committee criticizes this decision. Even then, according to the financial expert from forchheim, there were clear signs that this north german credit institution was in a bad way. The unrivaled interest rates alone had set off alarm bells among city councilors. "The higher the interest, the higher the risk. Everybody knows that", finds the member of the forchheim foundation committee.
However, he adds, it depends on how the money is invested. If there is something in the terms of business about risk liability, it could be that in the event of bankruptcy, the deposits are gone.
"That’s why I asked explicitly, but our chamberlain was relatively quiet about it", klaus neuner adds.
Chamberman wolfgang krippel appeased. "This is nothing risky and has been agreed with the foundation’s supervisory authority."
In a written statement, mayor christiane meyer (NLE) adds that the plant is tamper-proof, a loss of value is almost impossible, and a rough stability of value is ensured. The ebermannstadt mayor underlines. "Despite the planned sale, the foundation’s deposit is secured." It refers to paragraph 94(4) of the security system of the savings banks financial group. The joint liability scheme of the savings bank financial groups will be effective for two years after the sale of the HSH-bank.
Councilman klaus neuner, on the other hand, counters: "according to the deposit protection act, generally only deposits up to an amount of 100.000 euros covered by the statutory entitlement." He asks: "what about the remaining? Who guarantees that the foundation will receive the entire sum back in august??"
Mayor christiane meyer, on the other hand, is confident that the foundation will not lose any money. Since the commitment period of the investment of the foundation assets of the parrer stang/paul herbst foundation with nordbank expires on 6. The administration will propose to the city council a new form of investment that takes account of the current development.

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