In the first instance, that is somewhat surprising, given that the balance sheet total of small and medium-sized banks has increased slightly, while capital has marginally declined. In fact, Tier 1 capital ratios could reasonably have been expected to fall too.
The fact that they remained stable can be explained by the reduction in the riskiness of banks’ balance sheets – because this is the basis for calculating Tier 1 capital ratios. That is also something I like to see as a supervisor. As far as the liquidity of small and medium-sized institutions in Germany is concerned, there isn’t really a lot I can say.