Structure, business model, and features of the IPS*
This management report supplements the consolidated financial statements of the Volksbanken Raiffeisenbanken Cooperative Financial Network.
The Volksbanken Raiffeisenbanken Cooperative Financial Network consists of 814 cooperative banks (2019: 841), the DZ BANK Group, Münchener Hypothekenbank eG, the BVR protection scheme, and BVR Institutssicherung GmbH as consolidated entities. The consolidated cooperative banks include Deutsche Apotheker- und Ärztebank eG, the Sparda banks, the PSD banks, and specialized institutions such as BAG Bankaktiengesellschaft.
The cooperative banks and Münchener Hypothekenbank eG are the legally independent, equally ranked parent entities of the Cooperative Financial Network, whereas the other banking groups and entities are consolidated as subsidiaries. The Cooperative Financial Network is thus a decentralized organization made up of legally independent institutions. This decentralized element is in contrast with banking groups that have a parent company at the top of a hierarchical structure. The power to make business decisions lies with each individual institution and its independent Board of Managing Directors and Supervisory Board.
The Volksbanken Raiffeisenbanken Cooperative Financial Network’s institutional protection scheme (IPS) is set up as a dual cooperative scheme that comprises the BVR protection scheme and BVR Institutssicherung GmbH. The IPS forms the backbone of risk management in the Cooperative Financial Network. The institutions are linked – through the BVR protection scheme – by their mutual liability. The protection scheme is mainly focused on preventing individual institutions from getting into difficulties.
The principles and methods of the institutional protection scheme are outlined in more detail in the combined opportunity and risk report.
Definition of the main operating segments
The definitions of the operating segments referred to in the Annual Report – Retail Customers and SMEs, Central Institution and Major Corporate Customers, Real Estate Finance, and Insurance – can be found in the notes to the consolidated financial statements starting on page 77.