When Is a Contract Not a Contract?

Sparkasse Ulm Allgoewer imagebroker okapia
The days are not looking so sunny anymore at Sparkasse Ulm.
  • Why it matters

    Why it matters

    • The ruling could set a precedent for banks attempting to change or terminate contracts that have become lucrative for savers in times of persistently low interest rates.
  • Facts


    • A total of 20,000 customers opened a Sparkasse Ulm savings account guaranteeing interest of 3 percent until 2030.
    • The public savings bank wants to get out of the costly account contracts.
    • About 6,000 savers still hold a Scala account, and 60 of them sued the bank for fulfillment of the contract.
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It was the second attempt to sort out the long-running legal dispute, but despite the very public setting, once again Sparkasse Ulm savings bank failed to reach an amicable settlement with its disgruntled customers.

The clients had signed contracts for savings accounts offering attractive interest rates, which the bank no longer wanted to pay. Depositors sued over the so-called “Scala” savings agreements, and the legal dispute will now continue following the latest failure. A verdict is expected on January 26.

The proceedings this week were doubtlessly sobering for Sparkasse Ulm, with Judge Julia Böllert maintaining her hard line against the financial institution. She reaffirmed that the law required the savings bank to adhere to its contracts, which have been lucrative for savers in this time of low interest rates.

The public dispute over savings contracts is new to Germany. Amid mounting losses, Sparkasse Ulm, part of the public Saving Banks Finance Group, was pushing clients out of the Scala agreements, some of which still had many years to run. The agreements offer interest at rates of more than 3 percent and run until 2030 at the latest.

“Scala” derives from the Italian word for “stairway.” In the contracts, savers received an increasing bonus in addition to variable basic interest rates.

“It would be a good thing if we could reach an overall settlement.”

Julia Böllert, judge

About 14,000 of 20,000 clients who held the contracts have agreed to alternative offers that pay lower rates of interest or don’t run for as long. But about 60 savers sued, demanding that the bank stand by the terms of the original agreements.

The issues being debated in court involve whether letters sent to clients can be considered threats to cancel the contracts and whether the savings bank theoretically has the right to issue cancellations.

How these matters are resolved could set precedents far beyond the immediate case.

Christoph Lang, the lawyer representing savers who had signed a Scala agreement, including his father and mother, argued that the savings bank was not authorized to cancel the contract before its expiration date, and that the rate of monthly savings can at any time be raised to €2,500 ($3,120) or reduced to €25. His father had frequently withdrawn money as well.

Lawyers for Sparkasse Ulm issued a counter-claim, citing misuse of the savings contract whose purpose, as specified in the prospectus, is to build funds for retirement.

Moreover, the bank demanded that bonus interest be paid back. Judge Böllert rejected that demand.

The judge had tried to reach an agreement that would apply to all Scala savers and that took the bank’s interest into consideration, with a provision that savers forgo payment of back interest until an agreement was reached.

The bank agreed to all points but insisted that all Scala contracts run only until 2020. The court had proposed a maximum contract length until 2026. “That is the toad you must swallow,” the judge told representatives of Sparkasse Ulm. They refused, and the amicable settlement failed.

Ingrid Ritter, an advisor for the consumer protection agency in Ulm, said it’s important that a verdict be reached “to establish more clarity for consumers.”

That could be painful for Sparkasse Ulm if all remaining Scala savers insisted on retaining their contracts. An even bigger problem would be if the bank had to also accommodate the 14,000 customers who already changed their contracts.

Since the case has proceeded favorably for the Scala savers, Mr. Lang lawyer said he expects his clients will be less likely to settle.

A spokesperson for the bank said it continues to seek a fair solution for its customers.


Elisabeth Atzler is a Handelsblatt banking correspondent. Martin-Werner Buchenau reports for Handelsblatt from Stuttgart on politics and business. To contact the authors:,

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