Allianz Trade
Hamburg (ots)
- Allianz Trade raises forecast for bankruptcies in Germany: 22% more bankruptcies expected in 2023
- Reasons for the stronger increase are a longer-term rise in interest rates and an unfavorable shift in financial risks: banks more restrictive in lending and KFW loans due as well as worsened profitability among companies
- Still no wave of bankruptcies, but normalization: case numbers in Germany in 2023 are still 5% below the level before the 2019 pandemic
- Germany in the global trend: Global insolvencies will increase by 21% in 2023 and are therefore also 5% below the values of 2019
- Europe: 24% more bankruptcies expected, strongest increase in the Netherlands and France
The turbulence on the banking market is not without consequences: more companies than expected at the beginning of the year are likely to run into difficulties as a result of the banks’ now even more restrictive lending policies. The world’s leading credit insurer Allianz Trade has therefore adjusted its forecast in its most recent insolvency study. Allianz Trade now expects corporate insolvencies in Germany to increase by 22% in 2023 (previously 15%). That’s around 17,800 cases, about 800 more than originally expected – but still 5% below pre-pandemic levels. With this development, Germany is following the global trend: Allianz Trade expects global insolvencies to increase by 21%.
“It’s still not a wave of bankruptcies, even if a double-digit increase initially gives the impression. However, the number of cases in Germany has recently been at a historically low level,” says Milo Bogaerts, CEO of Allianz Trade in Germany, Austria and Switzerland. “Even by the end of 2023, Germany is unlikely to have reached the pre-pandemic level. This is only likely to be slightly exceeded again after a further increase in insolvencies of 6% in 2024.”
Economic expectations have brightened somewhat recently. However, the Allianz Trade experts continue to expect a slight recession for 2023 compared to the previous year, with gross domestic product (GDP) shrinking by -0.1%. At the same time, however, the financial framework conditions have deteriorated significantly.
Banking turbulence is leaving its mark: underfunded companies are at risk
“The banking turbulence is also leaving its mark in Germany,” says Bogaerts. “With the sharp rise in interest rates, companies with rather weak finances run the risk of getting into trouble. There are also numerous other uncertainties. With the turbulence on the banking market, credit institutions have now become even more cautious and restrictive when it comes to granting loans. This comes at a bad time for some companies , because KfW loans from the pandemic are increasingly due, which companies have to repay or refinance. Not everyone has the necessary buffer for this. That is why we are expecting a little more insolvencies in 2023 than before.”
Added to this is the deterioration in corporate profitability. They are struggling with higher energy prices, which, due to the long-term contracts, will gradually have an impact on their balance sheets from this year onwards. The rising cost of goods used and wages are an additional burden on profitability.
“Even the somewhat brighter economic prospects of late cannot compensate for this,” says Bogaerts. “Even a slight recession is still a recession and companies cannot dream of big leaps in sales to compensate for the higher costs. As a result, things will tighten on the financing side, which is currently already evident in the worsened payment practices and increasing insolvencies.”
Analogous to the worldwide trend – Germany is still doing well in Europe
However, Germany is not alone in this trend, but is following global developments. Globally, the leading commercial credit insurer expects bankruptcies to grow by 21% (+2pp higher than at the start of the year). And worldwide, the insolvency level of 2019 is unlikely to be reached this year either (-5% vs. 2019). After a further expected increase of 4% in 2024, the insolvency situation should only then have largely normalized (-1% vs. 2019).
In Europe, the insolvency dynamic is more pronounced than the global average, with an expected increase in bankruptcies of around 24%. This is mainly due to the sharp increase in insolvencies in the Netherlands (+52%), France (+41%), Ireland (+30%) and Italy (+25%). Many European countries are already well above pre-crisis levels in 2023, most notably Spain (+75% in 2023 vs. 2019), Great Britain (+29% vs. 2019), Denmark, Ireland and Switzerland (+18% vs. 2019) as well France (+15% vs. 2019)
“Germany is still in a good position compared to other European countries,” says Bogaerts. “The absolute number of cases is still very low. However, the dynamics of the increase in bankruptcies in the course of normalization have meanwhile adjusted to what is happening worldwide. There is no reason to panic – an occasion for caution and for even more careful debtor and liquidity management, however.”
The full study (PDF, ENG) can be found here:
Allianz Trade is the global market leader in credit insurance and a recognized specialist in sureties and guarantees, debt collection and protection against fraud and political risks. Allianz Trade has more than 100 years of experience and offers its customers comprehensive financial services to support them in liquidity and receivables management.
Using the company’s own monitoring system, Allianz Trade follows and analyzes the insolvency development of more than 80 million small, medium-sized and multinational companies on a daily basis. Overall, the expert analyzes cover markets that account for 92% of global gross domestic product (GDP).
With this expertise, Allianz Trade makes world trade more secure and gives the more than 66,000 customers worldwide the necessary trust in their transactions and their payment. As a subsidiary of Allianz and with an AA rating from Standard & Poor’s, Allianz Trade is the financially strong partner at its customers’ side in the event of a claim.
Headquartered in Paris, the company is represented in over 50 countries and employs more than 5,500 people worldwide. In 2022, Allianz Trade generated sales of EUR 3.3 billion and insured business transactions worth EUR 1,057 billion worldwide.
More information on www.allianz-trade.de
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Cautionary Note Regarding Forward-Looking Statements: The information contained in this release may contain statements about future expectations and other forward-looking statements that are based on management’s current beliefs and assumptions and involve known and unknown risks and uncertainties that could cause the actual results, developments or events may deviate significantly from the statements made here. In addition to forward-looking statements in their context, the use of words such as “may”, “will”, “should”, “expects”, “plans”, “intends”, “believes”, “estimates”, “forecasts”, “potentially ” or “continue” also reflects a forward-looking statement. Actual results, developments or events could differ materially from such forward-looking statements as a result of various factors. Such factors include, among others: (i) the general economic situation including the industry-specific situation for the Allianz Group’s core business or core markets, (ii) the development of the financial markets including the “emerging markets” including market volatility, liquidity and credit events, ( iii) the frequency and magnitude of the insured loss events, including those resulting from natural catastrophes; also the development of claims costs, (iv) lapse rates, (v) the extent of credit defaults, (vi) interest rates, (vii) exchange rate developments including the EUR-USD exchange rate, (viii) development of the intensity of competition, (ix) legal and regulatory changes including those relating to of currency convergence and European Monetary Union, (x) changes in the monetary policies of central banks or foreign governments, (xi) effects of acquisitions, including the associated integration issues, (xii) restructuring measures, and (xiii) general competitive factors, each at a local, regional level , national or international framework. The probability of many of these factors occurring can increase further as a result of terrorist attacks and their consequences. The company assumes no obligation to update any forward-looking statements.
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Allianz Trade
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Original content from: Allianz Trade, transmitted by news aktuell
