Financial Market Stabilisation Fund (FMS)

In response to the financial market crisis, the Financial Market Stabilisation Fund (FMS, formerly SoFFin) was established by the Federal government on 17 October 2008 and the legal basis for stabilisation measures to support the financial system.

Overview

The FMS is a special fund of the Federal government within the meaning of Article 110 (1) of the Basic Law.

Today, the FMS still includes the Federal government's shares in:

  • 15.6 % Commerzbank AG
  • 100 % Hypo Real Estate Holding GmbH 
  • € 2.0 bn silent participation Portigon AG)

The fund was designed for a total volume of up to € 400 bn for guarantees and € 80 bn for recapitalisations. During the peak phase of the FMS, € 168 bn in guarantees and € 29.4 bn in capital measures were granted. 

Thanks to the rescue measures of the FMS, the German banking sector was supported and contagion effects on other institutions and the real economy were avoided. At times, up to 25% of the balance sheet total of the German banking industry was stabilised by measures of the FMS, thus also saving the remaining 75% from the devastating effects of a destabilisation of the entire financial market. This is a particularly important aspect: it was never a question of supporting a specific institution. In view of the close interconnections between the banks, it was the goal and requirement of the FMS to stabilise the entire German financial system and thus prevent a conflagration. 

It is a great success that all guarantees granted were repaid without any default. The instrument of granting guarantees has fully achieved its goal of basing confidence among banks on mutual solvency and has been confirmed as the right measure. The FMS has granted guarantees with a maximum volume of € 168 bn. As a result of the granted guarantees, more than € 2.0 bn guarantee fees were collected. Nevertheless capital measures amounting to approximately € 14.6 bn are still outstanding.

In total, the deficit accumulated by the FMS until 31 December 2021 amounts to about € 22.8 bn. The amount of the resulting budgetary burdens for the federation and the state governments will only be known when the FMS is dissolved and thus settled. In the course of coping with the financial market crisis, the FMS was closed for new measures at the end of 2015 and the winding up of the fund was initiated as a result. 

Since 1 January 2018, the FMS has been managed by the Federal Republic of Germany - Finance Agency.