Banking in Germany

Banking in Germany is a highly leveraged industry, as its average leverage ratio (assets divided by net worth) as of 11 October 2008 is 52 to 1 (while, in comparison, that of France is 28 to 1 and United Kingdom is 24 to 1); its short-term liabilities are equal to 60% of the German GDP or 167% of its national debt.

History

Johann Hinrich Gossler, a member of the Berenberg/Gossler banking family

Banking in Germany has a long history. From the 15th century, banking families such as Fugger, Welser and Hochstetter were international mercantile bankers and venture capitalists. The oldest bank still in existence in Germany, Berenberg Bank, was founded by Dutch brothers Hans and Paul Berenberg in 1590, and is still owned by the Berenberg family.

Market overview

Germany has universal banking.

The private customer mostly has to choose between two kind of banks: (A) private banks, and (B) cooperative banks and public banks. (A) Postbank, Deutsche Bank, HypoVereinsbank, Commerzbank and Dresdner Bank (which was acquired by Commerzbank in 2008) - which cooperate together as the Cash Group - are found mostly in the cities whereas B are almost everywhere, and are exclusive in smaller villages. Principal (B) banks include: Sparkasse and Volksbank.

ATM (Geldautomat) are on nearly every corner. However, customers mostly have to use their bank's ATM with their debit card if they don't want to pay a fee. Cash Group offers free ATM through the group. Using a credit card (Visa/Mastercard/Diners Club/American Express) from a German bank in any German ATM generates a fee of about 3%. Most people prefer to use their EC/Maestro debit card. Many physical payments are still made in cash, but increasingly, Germans are using their EC/Maestro. Online payments are done mostly either with direct debit (Lastschrift) or with credit card.

Most of the banks offer a free main account (Girokonto) as long as the customer deposits a minimum amount regularly (> 1000€ income each month). Online banks such as ING Diba or comdirect offer cheaper service and free credit cards.

Banking law

Main article: German banking law

See also

• Economy of Germany
• Banking in Europe

References

• J Cable, ‘Capital Market Information and Industrial Performance: The Role of West German Banks’ (1985) 95 Economic Journal 118