German savings banks – a model to follow?

By Simon Rose on December 11, 2013

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Focus on real economy 

Although Germany has big banks with famous names and international reputations, the majority of business financing is carried out by the decentrally organised banking groups of which savings banks are a substantial part.

The Savings Bank Finance Group has roughly 42% share of business financing, with more than 80% of medium to long-term loans.

Loans to small businesses are almost exclusively covered by savings banks (as well as co-operatives) and savings banks have over 70% of the market share in that area.

Since 2008 – the onset of the financial crisis – savings banks have actually increased their new loans to businesses every year. They were up 4.8% in 2012 and 4.1% in the first half of 2013.

Despite the total volume of business, each individual savings bank is relatively small. The smallest has total assets of €130m while most of the 417 savings banks have total assets of around €1bn.

Each savings bank is an independent credit institution, fully liable for its own management decisions and deeply rooted in its local region. If you stand in a market square in any German city, you will see the classic trinity of the church, the town hall and the main office of the local savings bank. There is no hiding away from customers in distant skyscrapers!

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