The department store chain Galeria Karstadt Kaufhof has filed for bankruptcy several times in the past. This week, the tourism group FTI announced that it was no longer solvent. Both companies had received significant state aid from the Economic Stabilization Fund (WSF) during the Corona pandemic.
Galeria Karstadt Kaufhof received a total of 680 billion euros in the form of subordinated loans and silent participations. The three state aid packages for FTI Touristik GmbH added up to a volume of 595 million euros. The majority of the money is lost.
But the WSF, which was launched in March 2020, is not yet a billion-dollar grave. The fund is actually still in the black. As the annual financial statements for the years 2020 to 2023 show, the bottom line is still a surplus of just over 160 million euros. In particular, one transaction by the fund, which was designed as a “lifeline” for large companies, proved to be extremely lucrative for taxpayers.
A total of 25 companies had used funds from the WSF during the pandemic. That was fewer than expected. Many interested parties were put off by the high interest rates. Ultimately, the state paid out only 6.4 billion euros from the core of the fund – the 100 billion euros provided for direct capital injections.
While Lufthansa and TUI, for example, have already paid back the aid in full, plus interest, Galeria and FTI are not the only companies that have had to write off funds that were paid out. This was also necessary, for example, for the fashion company Orsay, the shoe retailer Görtz and the automotive supplier Frimo. In these cases, the amounts involved were comparatively low, in the double-digit millions.
In the current FTI case, government circles assume that 84 percent of the funds paid out have been lost. That would be 500 million euros. The fact that the expected loss is not even higher is because FTI has already paid back money in recent years.
Since the three stabilization measures were granted in 2020 and 2021, the WSF has “received returns amounting to almost three-digit millions – consisting of repayments and interest,” the responsible federal finance agency said.
It also announced that the majority of the total 595 million euros granted had already been written off in recent years. It is therefore already included in the fund’s current, overall positive business figures up to the end of 2023.
The situation is similar at Galeria Karstadt Kaufhof. Here, too, a large part of the aid has already been written off. The finance agency also speaks of returns in the “low three-digit million amount”, consisting of repayments, interest and the realization of collateral. Last year, the WSF had, among other things, begun to sell off holdings in the department store group that served as collateral.
This does not change the fact that the state and thus the taxpayer are losing a lot of money through the aid to both companies. The fact that the fund is still in the black is due to the state’s generally high interest rates and above all to a deal with Lufthansa shares. The airline was the first company to receive support in the summer of 2020. At the time, the state approved measures amounting to almost six billion euros – no company received more.
This included the purchase of Lufthansa shares for 306 million euros. The WSF later sold this package again in stages – and at a price well above the initial purchase price. In the end, the fund made a profit of 760 million euros from this alone.
It remains to be seen how much money will be returned from the companies in the future. According to the finance agency, most of the measures were granted for a period of six to seven years. Ultimately, it will not be clear until the end of the decade whether the taxpayer will actually get off as lightly as it currently looks, despite the major bankruptcies of Galeria and FTI.