In 2025, BAG Bankaktiengesellschaft assumed problematic exposures from the Volksbanks on an unusually large scale. Its business volume grew by just under 1.4 billion euros, as major problem loans and a weak economic climate weighed on the cooperative financial group. By the end of 2025, BAG was managing a portfolio of just over 1.7 billion euros, while credit risks, real estate-related issues, and equity holdings significantly impacted individual institutions. (handelsblatt: 28.05.26)
Volksbanks Offload Problem Loans in Unusually High Volumes
In 2025, the BAG absorbed more troubled exposures than it had at any time in roughly 20 years. According to sources within the cooperative financial group, the volume was approximately three times higher than in the previous year. This trend thus approached the crisis levels of 2003—a year also characterized by several major problem cases stemming from a poor economic climate.
However, the resolution bank handles more than just traditional loan defaults. Its scope of responsibilities also encompasses distressed real estate, investment funds, and equity holdings. This enables affected institutions to carve out impaired assets from their balance sheets and hand over their management to specialists.
Major Support Cases Burden the Cooperative Network
Several support cases account for a significant portion of this increase. For the Volksbanken (cooperative banks), this underscores the importance of the BAG as an internal instrument for risk management. At the same time, this surge demonstrates the extent to which individual regional banks can be burdened by concentrated credit and real estate risks.
Furthermore, more financially stable institutions utilize the BAG to alleviate operational burdens. In such instances, the specialized bank takes charge of restructuring, asset realization, or liquidation. Consequently, the administrative workload at the local level decreases, while any potential losses remain a matter of concern within the cooperative sector’s mutual protection scheme.
Weak Economic Climate Heightens Risks in Loan Portfolios
The German economy is currently providing little in the way of tailwinds. Many companies are grappling with high costs, sluggish demand, and expensive financing. As a result, additional loans—particularly those involving commercial real estate, project development, and larger corporate clients—could fall into distress.
Nevertheless, BAG CEO René Kunsleben does not anticipate a repeat of last year’s sharp surge in 2026. “We expect to take over distressed loans, real estate assets, and equity holdings totaling in the low triple-digit millions,” he stated. Thus, while the projected volume of new business remains elevated, the exceptional boost witnessed in 2025 is—according to current assessments—expected to subside.
Capital Increase Strengthens Scope for Further Risk Assumption
BAG has received a capital increase of 200 million euros. This strengthening expands its operational scope regarding the assumption of additional risks. At the same time, it demonstrates that the cooperative financial group is fortifying its resolution structure against future financial strains.
For customers of the Volksbanks, this entails no immediately apparent restrictions on their day-to-day banking operations. However, this development highlights just how costly poor credit quality and concentrated real estate risks can become. Consequently, stricter risk management at regional credit institutions is moving increasingly to the forefront.