October 17th 2008 – Nuremberg
GfK Financial Market Research examines the impact of the financial crisis on investment behavior and consumer confidence in the banking sector
Tumbling share prices, government rescue plans and bailouts worth billions have dominated the headlines in recent weeks. In view of this, GfK Financial Market Research has asked Germans about their opinion on the current financial crisis. Despite the gloomy news, up to now only a small section of the population feels affected personally. Overall, private clients still have confidence in German banks, especially public sector financial institutions.
The survey focused on four topical aspects, current and planned financial transactions, confidence in financial institutions and the effects of the financial crisis on consumer spending.
Only 22% of all respondents felt directly affected by developments in the financial markets. With only 30% of private investors in Germany perceiving an impact, this figure is moderate. However, many investors are shifting their assets into secure high-yield instruments.
Tax payers unwilling to foot the bill
Overall, the response of German private clients to the turmoil in the capital markets has been rather relaxed to date. The strongest perceived impact of the financial crisis on individuals is the fact that as tax payers, they will be paying for the imminent losses. 43% of respondents also took a critical view of the safety of their own pensions. This skeptical viewpoint is prevalent, in particular, among people in the middle age range with capital market activities (holders of shares, fund units and certificates). The younger age groups up to 29, who invest little in these instruments, do not currently see any actual effect of the financial crisis on their own situation.
In total, 16% of all respondents have regrouped their cash and savings deposits and 4% of those questioned said that they intended to do so in the next three months. This means that one in five Germans has responded to the financial market crisis by revising previous savings and investment decisions.
Switches in portfolio investments relate especially to high-risk instruments. Germans are instead moving their money into what are considered secure but high-yield investments. The volume of investments in shares, funds and certificates has decreased while direct access and fixed-term deposit accounts have recorded significant increases.
Customers remain loyal to their banks
A change in the choice of product is not necessarily associated with a change in bank. 91% of respondents who regrouped their investments showed loyalty to their banks. Clients who change bank usually swap to a public sector bank.
Irrespective of their client status, 69% of all respondents believe that savings bank investments are safe. This assessment is even stronger among existing customers of savings banks with an impressive 76% sharing this view. The positive figure is only exceeded by clients whose main bank is a Sparda bank (88%). However, only 42% of respondents consider these banks to be safe.
Overall, it is true to say that confidence in banks increases in line with stronger customer loyalty.
Despite the high level of confidence in the German banking system, 9% of respondents have already decided to keep some emergency savings at home. A further 2% intend to do this in the near future. This idea of safety is particularly common among younger women.
Distinction made between impact on personal situation and global repercussions
The survey findings show that private clients distinguish between the global picture and how they are personally affected. 66% of subjects believe that the worst of the financial crisis is yet to come while more than half think that a global economic crisis is imminent and almost 50% expect a recession in Germany. Nevertheless, only 26% expressed fear of unemployment as a result of the financial crisis. One third also sees opportunities, with 33% agreeing to the statement that this would be the right time to buy shares and fund units while prices are low.
Another indicator of respondents’ perception of the financial crisis as a temporary phenomenon is reflected by the statements on consumer behavior. 63% of all respondents indicated that in the past three months, they had not changed their consumption patterns as a result of the crisis. Although one in five has been slightly more careful, spending less, the consumer spending of a considerable 6% was higher than before.