Generations of savers swore by it, children and grandchildren were delighted with it: Germans have grown fond of the Bundessschatzbrief for more than four decades. Now the babies are buried. “As of 2013, the federal government will no longer issue […]
Generations of savers swore by it, children and grandchildren were delighted with it: Germans have grown fond of the Bundessschatzbrief for more than four decades. Now the babies are buried. “As of 2013, the federal government will no longer issue any new series of federal treasury bills or issues of federal treasury funds,” the finance agency, the federal debt manager, announced succinctly.
In January 2011, the Frankfurt authority raved about the “remarkable success story that the Federal Treasury has written for over 40 years and more than 500 issues”. The “classic among federal securities” is worthwhile: “Be it the new living room cupboard in three years or the training allowance for your (grand) child in 18 years – practically every savings goal can be pursued with the federal treasury note.”
Up to ten percent interest
Conceived in 1968, the year of revolts and student protests, the federal treasury note developed into a bestseller from 1969 onwards. The first investment of the German state for the masses became an institution – like World Savings Day or the savings book for children. The low minimum investment amount (initially 100 D-Mark, later 50 euros) and lavish interest rates for a long time – almost ten percent at the top – convinced thousands of investors. Since the first edition on January 2, 1969, there have been 570 issues of federal treasury notes, 146 are still running.
“On average, federal treasury bills were a fair and safe investment,” says economist Marco Wilkens, who holds the chair for finance and banking at the University of Augsburg. “It is regrettable for investors that this sensible investment option no longer exists,” says Wilkens, who empirically studies the attractiveness of treasury bonds.
Day bond should bring customers
In the spring of 2008 – before the financial crisis escalated – the federal government launched an attack on banks and savings banks: a day bond was intended to attract private customers on a large scale. The expectations of the first new federal security for private investors in almost 30 years were high: According to the information at the time, the Federal Republic of Germany – Finanzagentur GmbH wanted to increase the proportion of its private customers to three to five percent by 2013.
For comparison: At the beginning of the 1990s, around 15 percent of private investors were financiers of the state. According to the latest figures, private business now accounts for less than one percent of the federal government’s total debt. According to the Finance Agency, gross sales of federal treasury bills fell from a good 2.3 billion in 2002 to 81.8 million (as of April 2012).
Poor interest rates are a deterrent
Finance professionals such as banks, insurers and funds have long dominated the market for federal securities. The private customer business is comparatively expensive for the federal government. In addition, interest rates of 0.05 percent in the first year to 1.75 percent at the end of the term of six or seven years have hardly been a lure to park long-term money in federal treasury bills.
“Nostalgia is out of place,” says Fidel Helmer from the private bank Hauck & Aufhäuser, which has been actively following events on the financial markets for more than 40 years. “The federal treasury note is an instrument that is no longer up-to-date, the young people are not interested in it, the focus is much more on returns.”
The serenity of turtle “Günther Schild”, the advertising mascot of the finance agency, and his financial expertise (“Money is like salad. If I let it grow in peace, it brings me the most”) no longer seem to be convincing.
Look for alternatives
But what should parents and grandparents give their offspring as a first investment? The euro critic Wilhelm Hankel, who is considered the father of the federal treasury note, has long since sold his treasures. “The fact that this paper became a euro paper annoyed me,” said Hankel a year ago to the investor magazine “Börse Online”. He only puts money in future-proof currencies: such as Swiss francs and Norwegian kroner.
Economist Wilkens, however, still thinks it is a good idea for investors in Germany to hold their own: “When the grandson is three years old, you can definitely give him a ten-year federal bond. He won’t sell them beforehand – and then the risk is comparable to a federal treasury note. ”