German public banking sector explained

The German public banking sector (German: Öffentliches Kreditwesen) represents a significant share of the broader banking sector in Germany. Unlike in most other Western and Central European countries, German public-sector banks have been present since the early phases of formalization of banking entities in the early modern period and have never lost their collective significance. They are typically referred to as one of the three “pillars” of the German banking system, the other two pillars being the cooperative banks and commercial banks.

Following many steps of development, consolidation, and restructuring, the German public banking sector (leaving aside the Deutsche Bundesbank) consists mainly of two clusters: the Sparkassen-Finanzgruppe, which competes with commercial and cooperative banks and includes local savings banks (German: Sparkassen) and regional entities (German: Landesbanken); and promotional and development banks (German: Förderbanken) owned by the Federal Republic of Germany (in the case of KfW) or the individual states of Germany.

History

Government-owned banks are among the oldest financial institutions in Germany, with several appearing in the late 18th century simultaneously as the first municipally-owned savings banks. Throughout the 19th century, governments of individual states or provinces of Prussia established (respectively) German: Landesbanken and German: Provinzialbanken to lend to various kinds of borrowers, including Sparkassen but not limited to them. Unlike in most European countries where banking was an exclusive activity of the private sector, government-owned banks thus remained a structural feature of the German financial system, even as joint-stock gained relative importance in the second half of the century.

The beginning of the 20th century saw the emergence of a number of German: Girozentralen acting as centralizing entities for their region's Sparkassen, a trend that was greatly accelerated by government policy choices during World War I even though it had started slightly earlier; numerous episodes of consolidation followed, leading to the current Landesbank landscape. By 1929, government-owned banks accounted for at least 40 percent of all banking assets in Germany. That feature set Germany apart from other European countries in which, aside from the Soviet Union of course, the bulk of the banking sector was in private-sector hands.

As a consequence of the European banking crisis of 1931, further German banks were nationalized, but they were soon reprivatized in 1935–1937 by Nazi Germany. Still, by 1938, government-owned banks represented 42 percent (in terms of aggregated assets) of the 25 largest banks in Germany, not counting those in annexed Austria. These included the Prussian and Bavarian German: Staatsbanken,, Reichs-Kredit-Gesellschaft, Deutschlandkasse, Deutsche Girozentrale, and eight regional German: Girozentralen, namely those in Düsseldorf (serving the Rhineland), Dresden (Saxony), Munich (Bavaria), Magdeburg (central Germany), Berlin (city), Hanover (Lower Saxony), Berlin (Brandenburg), and Breslau (Silesia). (The other 11 banks in the top 25 were Deutsche Bank, Dresdner Bank, Bank der Deutschen Arbeit, Commerzbank, the indirectly government-owned Deutsche Verkehrs-Kredit-Bank, cooperative Deutsche Rentenbank-Kreditanstalt, Bayerische Hypotheken- und Wechsel-Bank, Deutsche Centralbodenkredit AG, part-government-owned Deutsche Industriebank and Deutsche Bau- und Bodenbank, and Bayerische Vereinsbank.) By 1943, the share had risen to 54 percent.

With the delineation of West Germany's German: Länder between 1948 and 1957, the Landesbanks started acting as "house banks" of their respective German: Land, thus expanding into some of largest foreign issuers in Germany. By the early 21st century, other European countries that had nationalized swathes of their banking sectors in the 1930s and 1940s had mostly brought them back into the private sector, and Germany again stood out for the large share of its banking sector under government control, a situation that has not much changed in the subsequent two decades.

The German: Förderbanken emerged more recently as a distinct category. KfW was established in 1948 and a few regional promotional banks in the early 1950s, but in most German states they were created (in Eastern Germany) or spun off from the local Landesbank (in the West) in the 1990s and 2000s.

The German public banking sector has witnessed numerous episodes of distress, in part because of its inherently politicized governance. In mid-1931, the default of the Landesbank der Rheinprovinz, following aggressive and uncontrolled expansion of its credit to German municipalities, was a major trigger of Germany's economic depression, even though other Landesbanken such as the German: Mitteldeutsche Landesbank survived the episode largely unscathed.[1] Other cases of major difficulties have included the troubles of Westdeutsche Landesbank (WestLB) in the 1970s; Bankgesellschaft Berlin in the early 2000s; and (again) WestLB in 2007–2008; and HSH Nordbank and NORD/LB in the 2010s.

The following lists detail the path of formation of the current landscape, which has tended to be understudied because of its complexity and heterogeneity.[2] For relative readability, developments are classified in broad geographical categories, and individual German: Sparkassen are omitted. The list also omits various state financial entities set up at the time of Nazi Germany and discontinued in 1945.

National entities

Berlin and Eastern Germany

Northwestern Germany

Western-central Germany

Southern Germany

Cross-regional consolidation

National representation

Two overlapping organizations represent the German public banking sector: the Deutscher Sparkassen- und Giroverband (DSGV), the umbrella organization for the Sparkassen-Finanzgruppe; and the Association of German Public Banks, which brings together the Landesbanks (also members of the DSGV) and the German: Förderbanken.

See also

Notes and References

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  2. Web site: University of Bielefeld . 220132 Geschichte der öffentlichen Banken (S) (WiSe 2013/2014) . Christopher Kopper & Sebastian Knake.
  3. Web site: DZ Bank . the History of DZ Bank: Die genossenschaftlichen Werte .
  4. Web site: History of KfW . KfW .
  5. Web site: Reuters . . Germany's DekaBank fires CEO after spat over bonus .
  6. Web site: Landesarchiv Sachsen-Anhalt . I 93 Magdeburg Mitteldeutsche Landesbank, Magdeburg, 1922-1945 (Bestand)[Location: Magdeburg] ].
  7. Web site: ZBW Leibniz Information Centre for Economics . Schlesische Landesbank und Girozentrale.
  8. Web site: Thüringische Staatsbank, Weimar . sammleraktien-online.de.
  9. Web site: Archivportal Thüringen . Landesbank zu Altenburg (1819-1923) .
  10. Web site: Über die GSW. GSW .
  11. Web site: ZBW Leibniz Information Centre for Economics . Berliner Stadtbank – Girozentrale der Stadt Berlin.
  12. Web site: ZBW Leibniz Information Centre for Economics . Brandenburgische Provinzialbank und Girozentrale.
  13. Web site: Staatsarchiv Dessau-Rosslau . . Dessau in Trümmern - Anhalt-Dessauische Landesbank .
  14. Web site: Deutsche Bundesbank . 50 Jahre Landeszentralbank in Berlin und Brandenburg 1949 - 1999 .
  15. Book: Eine Bank für Berlin: Die Geschichte der Berliner Bank von 1950 bis heute . Oliver Bortz & Torsten Bonnet . Nicolaische Verlag . 2010.
  16. Web site: Sächsische Aufbaubank (SAB) . Fördermittel Deutschland. 8 June 2022 .
  17. Web site: Financial Times . Takeover strips shine from star state . Hugh Williamson . .
  18. Web site: Investitionsbank des Landes Brandenburg . We are there for you .
  19. Web site: . 30 Jahre Thüringer Aufbaubank: 21. Juli 1992 – 21. Juli 2022 . Thüringer Aufbaubank.
  20. Web site: Investitionsbank Berlin. Investitionsbank Berlin .
  21. Web site: WochenSpiegel . Sebastian Seemann . . 100 Prozent Sachsen-Anhalt .
  22. Web site: Wall Street Journal . Berlin Bank's Collapse Puts Spotlight On Many Roles of Klaus Landowsky . Ian Johnson, Cecilie Rohwedder & Marcus Walker . .
  23. Web site: NORD/LB . Mecklenburg-Vorpommern Special . .
  24. Web site: L-Bank . Geschichte der L‑Bank .
  25. Web site: Cleary Gotlieb . German Savings Bank Association in Landesbank Berlin Acquisition; Landmark Deal for German Financial Sector . .
  26. Web site: Pfandbrief Market . Calenberger Kreditverein.
  27. Web site: Weser Kurier . Den Anfang machte 1883 die "Bodencredit-Anstalt" . . Florian Schwiegershausen.
  28. Web site: ZBW Leibniz Information Centre for Economics . Landesbank Schleswig-Holstein Girozentrale.
  29. Web site: ZBW Leibniz Information Centre for Economics . Landesbank der Provinz Hannover.
  30. Web site: Fördermittel Deutschland . Bremer Aufbau-Bank BAB . 8 June 2022 .
  31. Web site: Nord/LB . NORD/LB Norddeutsche Landesbank – Girozentrale .
  32. Web site: Fördermittel Deutschland . Investitionsbank Schleswig-Holstein IB.SH . 8 June 2022 .
  33. Web site: Fördermittel Deutschland . Investitions- und Förderbank (IFB HH) . 8 June 2022 .
  34. Web site: TradeWinds . Nullmeyer quits shipping desk as part of BLB merger with Nord/LB . . Ian Lewis .
  35. Web site: World Cargo News . HSH Nordbank finally sold and renamed Hamburg Commercial Bank . .
  36. Web site: ZBW Leibniz Information Centre for Economics . Landesbank für Westfalen - Girozentrale.
  37. Web site: ZBW Leibniz Information Centre for Economics . Hessische Landes-Hypothekenbank AG.
  38. Web site: ZBW Leibniz Information Centre for Economics . Westfälisches Pfandbriefamt für Hausgrundstücke.
  39. Web site: ZBW Leibniz Information Centre for Economics . Hessische Landesbank - Staatsbank.
  40. Web site: ZBW Leibniz Information Centre for Economics . Landeskommunalbank - Girozentrale für Hessen.
  41. Web site: ZBW Leibniz Information Centre for Economics . Landesbank Hessen-Thüringen Girozentrale.
  42. Web site: SaarLB . Weitsicht durch Nähe : Eckpunkte unserer Geschichte . 9 December 2022 .
  43. Web site: Geschäftsbericht / Landesbank und Girozentrale Kaiserslautern. Zeitschriften Datenbank .
  44. Web site: Fördermittel Deutschland . Saarländische Investitionskreditbank (SIKB) . 8 June 2022 .
  45. Web site: Fördermittel Deutschland . NRW.Bank . 8 June 2022 .
  46. Web site: Fördermittel Deutschland . Förderbank Hessen (WIBank) . 8 June 2022 .
  47. Web site: Fördermittel Deutschland . Investitionsbank Rheinland-Pfalz (ISB) . 8 June 2022 .
  48. Web site: Reuters . Germany waves goodbye to WestLB as bank broken up . . Matthias Inverardi.
  49. Book: Hundertfünfzig Jahre Württembergische Landessparkasse: 1818 - 1968 . Württembergische Landessparkasse . 1968 . Stuttgart.
  50. Web site: Bayern Labo . Die Geschichte der BayernLabo .
  51. Web site: ZBW Leibniz Information Centre for Economics . Badische Landeskreditanstalt für Wohnungsbau.
  52. Web site: Fördermittel Deutschland . LfA Förderbank Bayern . 4 August 2022 .
  53. Web site: LBBW.de . . LBBW is celebrating its bicentenary .
  54. Web site: Fördermittel Deutschland . L-Bank . 8 June 2022 .
  55. Web site: Wall Street Journal . Bayern to Purchase Majority Stake In Rival Bank in Western Germany . Caspar Busse Handelsblatt . .
  56. Web site: Manager Magazin . Saarland kauft Bayern aus SaarLB heraus . .

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