German public banking sector


The German public banking sector 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 consists mainly of two clusters: the Sparkassen-Finanzgruppe, which competes with commercial and cooperative banks and includes local savings banks and regional entities ; and promotional and development banks owned by the Federal Republic of Germany 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 Landesbanken and 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 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 of the 25 largest banks in Germany, not counting those in annexed Austria. These included the Prussian and Bavarian Staatsbanken,, Reichs-Kredit-Gesellschaft, Deutschlandkasse, Deutsche Girozentrale, and eight regional Girozentralen, namely those in Düsseldorf, Dresden, Munich, Magdeburg, Berlin, Hanover, Berlin, and Breslau. By 1943, the share had risen to 54 percent.
With the delineation of West Germany's Länder between 1948 and 1957, the Landesbanks started acting as "house banks" of their respective Land, thus expanding into some of largest German issuers of cross-border debt. 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 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 or spun off from the local Landesbank 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 Mitteldeutsche Landesbank survived the episode largely unscathed. Other cases of major difficulties have included the troubles of Westdeutsche Landesbank in the 1970s; Bankgesellschaft Berlin in the early 2000s; and 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. For relative readability, developments are classified in broad geographical categories, and individual 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

  • 1619: Hamburger Bank established in Hamburg
  • 1765: Herzogliche Leyhaus established in Braunschweig
  • 1825: established in Hanover
  • 1840: Hannoversche Landeskreditanstalt established in Hanover
  • 1875: Hamburger Bank taken over by the Bank of Prussia
  • 1883: Bodencredit-Anstalt des Herzogtums Oldenburg established in Oldenburg, renamed Staatliche Kreditanstalt des Herzogtums Oldenburg in 1906 and Staatliche Kreditanstalt Oldenburg in 1922
  • 1917: Landesbank Schleswig-Holstein Girozentrale established in Kiel
  • * Landesbank der Provinz Hannover established in Hanover
  • 1918: Niedersächsische Wohnungskreditanstalt Stadtschaft established in Hanover
  • 1919: Herzogliche Leyhaus in Braunschweig renamed
  • 1928: Hansa-Bank established in Bremen
  • 1933: Landesbank der Provinz Hannover renamed Niedersächsische Landesbank Girozentrale
  • 1938: Staatliche Kreditanstalt Oldenburg-Bremen formed by merger of Hansa-Bank and Staatliche Kreditanstalt Oldenburg
  • * Bremer Landesbank – Girozentrale established in Bremen
  • * Hamburgische Landesbank – Girozentrale established in Hamburg
  • 1951: Bremer Aufbau-Bank established in Bremen
  • 1952: Hamburgische Wohnungsbaukasse established in Hamburg, renamed Hamburgische Wohnungsbaukreditanstalt in 1973
  • 1970: Norddeutsche Landesbank Girozentrale
  • 1983: Bremer Landesbank Kreditanstalt Oldenburg – Girozentrale formed by merger of Bremer Landesbank – Girozentrale and Staatlichen Kreditanstalt Oldenburg-Bremen
  • 2001: Investitionsbank Schleswig-Holstein established in Kiel
  • 2003: HSH Nordbank AG formed by merger of Hamburgische Landesbank – Girozentrale and Landesbank Schleswig-Holstein Girozentrale, with joint head offices in Hamburg and Kiel
  • 2004: Investitions- und Förderbank Niedersachsen established in Hanover
  • 2005: Hamburgische Investitions- und Förderbank established in Hamburg
  • 2013: IFB Hamburg takes over Hamburgische Wohnungsbaukreditanstalt
  • 2017: BLB merged into NORD/LB
  • 2019: HSH Nordbank privatized and renamed Hamburg Commercial Bank; Landesbank role in Hamburg and Schleswig-Holstein taken up by NORD/LB

Western-central Germany

Southern Germany

  • 1780: Hochfürstlich-Brandenburg-Anspach-Bayreuthische Hofbanco established in Ansbach, successively renamed as Königlich Baierische Banco, Königliche Bank Nürnberg, Königliche Filialbank in Munich, and Bayerische Staatsbank
  • 1818: established in Stuttgart as national savings bank of the Kingdom of Württemberg
  • 1884: Landeskultur-Rentenanstalt established in Munich
  • * Städtische Sparkasse Stuttgart established in Stuttgart
  • 1914: Bayerische Girozentrale founded, permanently established in 1917 in Nuremberg and relocated in 1920 in Munich
  • 1916: Zentralstelle des Württembergischen Giroverbands – Stuttgart established in Stuttgart, later renamed Landesbank Stuttgart
  • 1923: Württembergische Notenbank becomes government-owned
  • 1924: Württembergische Wohnungskreditanstalt established in Stuttgart; renamed Württembergische Landeskreditanstalt in 1932
  • * Badische Landeskreditanstalt für Wohnungsbau established in Karlsruhe
  • 1925: Bayerische Girozentrale reorganized and renamed Bayerische Gemeindebank Öffentliche Bankanstalt
  • 1929: established in Mannheim
  • 1931: Bank of Baden becomes government-owned; relocated to Karlsruhe in 1932
  • 1934: Bank of Baden and Württembergische Notenbank deprived of their note-issuing role and repurposed as commercial entities; the latter renamed Württembergische Landeskommunalbank - Girozentrale in 1935
  • 1949: Landeskultur-Rentenanstalt renamed Bayerische Landesbodenkreditanstalt
  • 1951: LfA Förderbank Bayern established in Munich
  • 1971: Bayerische Staatsbank privatized and acquired by Bayerische Vereinsbank
  • 1972: Bayerische Landesbank Girozentrale formed by merger of Bayerische Gemeindebank Öffentliche Bankanstalt and Bayerische Landesbodenkreditanstalt
  • * formed by merger of Württembergische Landeskreditanstalt and Badische Landeskreditanstalt für Wohnungsbau
  • 1975: Landessparkasse – Girokasse öffentliche Bank formed by merger of Württembergische Landessparkasse and Städtische Spar- und Girokasse Stuttgart, renamed in 1977
  • 1978: formed by merger of Bank of Baden, Württembergische Bank and private-sector Handelsbank Heilbronn, with seat in Stuttgart
  • 1988: formed by merger of Landesbank Stuttgart and Badische Kommunale Landesbank, with seat in Stuttgart
  • 1998: Landeskreditbank Baden-Württemberg – Förderbank formed from the development finance activities of Landeskreditbank Baden-Württemberg
  • 1999: Landesbank Baden-Württemberg formed by merger of SüdwestLB, Landesgirokasse Stuttgart and the commercial activities of Landeskreditbank Baden-Württemberg
  • 2005: BW-Bank merged into LBBW

Cross-regional consolidation

  • 1992: Hessische Landesbank Girozentrale takes up Landesbank role in Thuringia, and is renamed Landesbank Hessen-Thüringen Girozentrale while keeping the shorthand name Helaba
  • * NORD/LB takes up Landesbank role in Saxony-Anhalt
  • 1993: NORD/LB takes up Landesbank role in Mecklenburg-Vorpommern
  • 2001: BayernLB acquires majority control of SaarLB
  • 2005: LRP merged into LBBW
  • 2007: SachsenLB acquired by LBBW
  • 2010-2013: Saarland acquires control of SaarLB from BayernLB

National representation

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