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 France, officially the French Republic, is a country located primarily in Western Europe. Overseas France, Its overseas regions and territories include French Guiana in South America, Saint Pierre and Miquelon in the Atlantic Ocean#North Atlan ...

is 28 to 1 and that of the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...

is 24 to 1); its short-term liabilities are equal to 60% of the German GDP or 167% of its national debt.

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 Joh. Berenberg, Gossler & Co. Kommanditgesellschaft, KG, commonly known as Berenberg Bank and also branded as simply Berenberg, is a Multinational corporation, multinational full-service private bank, private and merchant bank headquartered in H ...

, was founded by Dutch brothers Hans and Paul Berenberg in 1590, is still owned by the

Berenberg family The Berenberg family (Dutch language, Dutch for "bear mountain") was a Flanders, Flemish-origined Hanseaten (class), Hanseatic family of merchants, bankers and senators in Hamburg, with branches in London, Livorno and other European cities. The ...

, and is the world's oldest or second oldest bank, depending on the exact definition.

Market overview

Germany has universal banking. The private customer mostly has to choose between three kinds of banks (German "three pillar system"): # private banks (including

direct bank A direct bank (sometimes called a branch-less bank or virtual bank) is a bank that offers its services only via the Internet, mobile app, email, and other electronic means, often including telephone, online chat, and mobile check deposit. A direct ...

s): the largest ones are

Deutsche Bank Deutsche Bank AG (, ) is a Germany, German multinational Investment banking, investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Stock Exchange. ...

, Postbank (acquired by Deutsche Bank), Unicredit Bank AG (HypoVereinsbank),

Commerzbank The Commerzbank Aktiengesellschaft (shortly known as Commerzbank AG or Commerzbank ) is a European Financial institution, banking institution headquartered in Frankfurt am Main, Hesse, Germany. It offers services to private and entrepreneurial c ...

and Dresdner Bank (which was acquired by Commerzbank in 2008) they cooperate as the Cash Group # cooperative banks: see German Cooperative Financial Group #

public bank A public bank is a bank, a financial institution, in which a State (polity), state, municipality, or public actors are the owners. It is an enterprise under government control.

s, including local

savings bank A savings bank is a financial institution that is not run on a profit-maximizing basis, and whose original or primary purpose is collecting deposits on savings accounts that are invested on a low-risk basis and receive interest. Savings banks ha ...

s: Sparkassen and Landesbanken, see Sparkassen-Finanzgruppe Private banks are found mostly in the cities, whereas cooperative and savings banks are almost everywhere and are often exclusive in smaller villages. ATMs (Geldautomaten) are on nearly every corner. However, customers mostly have to use their bank's ATM with their

debit card A debit card, also known as a check card or bank card, is a payment card that can be used in place of cash to make purchases. The card usually consists of the bank's name, a card number, the cardholder's name, and an expiration date, on either ...

if they do not want to pay a fee. Cash Group offers free ATMs through the group. Using a credit card ( Visa/ MasterCard/ Diners Club/

American Express American Express Company or Amex is an American bank holding company and multinational financial services corporation that specializes in payment card industry, payment cards. It is headquartered at 200 Vesey Street, also known as American Expr ...

) from a German bank at 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 a credit card. Most banks offer a free main account ( Girokonto) as long as the customer deposits a minimum amount regularly (over €1000 in income each month).

History

Market overview

See also

References

Further reading