Financial Institutes

Cuba, China Banking on the German System

  • Why it matters

    Why it matters

    The German savings bank model, in which banks use their customers’ deposits to lend to local businesses and entrepreneurs, is beginning to catch on in other countries. A program by the German Savings Bank Foundation for International Cooperation helps to familiarize bank employees in other countries with how the German system works.

  • Facts


    • The Savings Bank Foundation has programs in 43 countries.
    • One of the selling points for the German savings bank model is that savings banks and cooperative banks weathered the financial crisis more effectively than private banks.
    • The German savings bank model is a precursor to microfinance today.
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Popular Savings Bank or Banco Popular de Ahorro BPA facade.
Savings banks are ever more popular abroad. Source: Getty

You rarely catch banker Heinrich Haasis, 72, enraptured but turn talk to Cuba and the president of the Savings Bank Foundation for International Cooperation lights up. It’s one of the 43 countries interested in Germany’s savings banks model and as Cuba opens up politically and economically, the German Savings Bank Foundation is helping the country transform its banking system.

German savings banks have a simple, robust system converting savers’ deposits into loans to self-employed and local small businesses, putting the welfare of stakeholders ahead of profit. They resemble the savings-and-loans banks in the US but are publicly-owned by municipal governments or federal states, and, rooted in their communities, often sponsoring local festivals and financing hospitals or universities.

Before the financial crisis, such banks seemed a little old fashioned with their 200-year-old business model. Afterwards, for countries fearful of relying on “too big to fail” banks, they suddenly seemed like a good idea.

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