German Co-Ops Tighten Rules After Rescuing ‘Mismanaged’ Banks

The cooperative banking sector in Germany approved a sweeping reform of its joint protection system after a series of costly interventions exposed the inherent moral hazard.

The changes were adopted Wednesday and strengthen the power of the organization managing the system, BVR, to intervene, it said in a statement. It’s also now easier to expel members or impose higher fees on them.

“There was mismanagement, irresponsible risks were taken,” BVR President Marija Kolak said in an interview earlier this year.

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