11.6.3.1 Funding problems

There is a difference in the way how the funding problems are mentioned. Sometimes, they are mentioned quite prominently; sometimes, they are mentioned only briefly. Some decisions really stress the funding problems of the bank. For instance, the decision on Hypo Real Estate (HRE) indicates – in the section that describes the problems of the bank – that “at the end of September 2008, HRE faced a liquidity shortage, which put the bank on the brink of insolvency”.1

This liquidity shortage was related to HRE’s reliance on wholesale funding. Especially its subsidiary DEPFA Bank was highly dependent on an intact interbank money market.2

Likewise, HSH Nordbank was heavily reliant on savings banks as a privileged source of funding.3 “Because HSH does not have access to retail customers to any significant extent, the bank will continue to rely on the wholesale markets where it will have difficulties securing funding. Compliance with more stringent regulatory requirements on capitalisation, liquidity buffers, and funding mismatches would be a particular challenge for pure wholesale banks like HSH”.4