Germany’s national bank has reported record losses of €19.2 billion, marking its first deficit since 1979.
In its latest figures for 2024, published on February 25, the Bundesbank predicted it would not make a profit in the next few years either, albeit losses were likely to be smaller.
“The peak of the annual burdens is likely to have been passed,” Bundesbank President Joachim Nagel said at the presentation of the annual financial statements in Frankfurt.
The news wiped out any windfall for the German federal budget, marking the fifth consecutive year without profit distribution by the lender.
Nagel had warned of tough times a year ago, stating: “We expect not to be able to distribute profits for a long time.”
OUCH! The Bundesbank reports a €19.2 billion loss for 2024—the first loss since 1979 and the largest in its history. pic.twitter.com/MiExtzy0tA
— Holger Zschaepitz (@Schuldensuehner) February 25, 2025
In 2023, the Bundesbank narrowly dodged a loss by dipping into billions in provisions but those buffers were now almost exhausted.
For 2024, only €0.7 billion in reserves remained to cushion the blow. The bank said it planned to offset the losses with future profits, although that looked a somewhat distant prospect to many.
Supporting some optimism, the Bundesbank’s gold reserves have soared in value, buoyed by rising precious metal prices.
At the end of 2024, its gold and foreign currency holdings were valued at €267 billion, up sharply from €197 billion a year earlier.
Bundesbank Vice-President Sabine Mauderer emphasised what she said was the solidity of the bank’s balance sheet: “The Bundesbank can bear both the current and expected financial burdens.
“What this shows is that the Bundesbank remains able to fully discharge its tasks even with an accumulated loss,” she said.
Mauderer concluded: “The Bundesbank’s balance sheet is sound.”
Germany’s national lender has been struggling since the European Central Bank’s (ECB) rate hikes starting in the summer of 2022, a response to inflation that had spiralled out of control.
Those measures worked — eurozone inflation has since retreated from its peaks, prompting the ECB to ease rates again.
But the damage to central bank finances lingers; the Bundesbank, like its ECB parent, holds vast portfolios of bonds locked into low returns from the era of quantitative easing, a legacy now clashing with the high-interest environment.
The ECB did not fare much better, reporting its own historic loss of €7.9 billion for 2024 — the worst in its 25-year existence.
For the Bundesbank, the fallout has been tough. Higher market interest rates have driven up its payment obligations, while income from long-held, low-yield securities, such as government and corporate bonds amassed during years of ECB monetary easing, failed to keep pace.
Net interest income, although slightly improved on 2023, remained deep in the red at €13.1 billion last year, down from €13.9 billion the previous year.
In Berlin, the loss stings doubly hard. The Ministry of Finance had long banked on a steady €2.5 billion annual profit from the Bundesbank.
As recently as 2019, then-finance minister Olaf Scholz savoured a €5.85 billion windfall, the highest since the financial crisis.
The record-losses mean fewer reserves or buffers to weather future financial storms.
For 2025, Germany was expected to face a third consecutive year of recession while it was promising to keep up support for Ukraine and has to rebuild its military after decades of disinvestment.
The number of new building permits in Germany for apartments has dropped by 17 per cent to the lowest level since 2010 – in what was described as a “balance sheet of horrors”. https://t.co/tyFhkbn2o5
— Brussels Signal (@brusselssignal) February 19, 2025
