Handelsblatt Interview

Small Banks, Big Problems

  • Why it matters

    Why it matters

    Germany’s savings banks may be small, but together they form the backbone of the country’s banking system. They need to reform their business to survive today’s period of low interest rates.

  • Facts

    Facts

    • German savings banks earned about 7 percent less last year than they did in 2015, largely becasue of lower profits from traditional lending.
    • They rely on traditional lending for about 80 percent of their earnings, a much higher amount than larger banks.
    • Record low interest rates are reducing profit margins from lending, and increasing their costs.
  • Audio

    Audio

  • Pdf
Festveranstaltung 25 Jahre Ostdeutscher Sparkassenverband
Even Germany's small savings banks, led by Georg Fahrenschon, worry about Donald Trump's populism. Source: Ralf Hirschberger/dpa

Many private banks across the Western world have seen their share price skyrocket since Donald Trump’s election as U.S. president. Georg Fahrenschon, who leads a group of non-listed state-backed banks in Germany, isn’t sure that’s necessarily a good thing.

The president of the association of German savings banks, a network of nearly 400 small, independent financial firms across the country, warned in an interview that the rise of populism and protectionism poses a serious threat to Europe and global society.

“We’re dealing with a worldwide crisis of confidence that is calling into question many of our accomplishments,” Mr. Fahrenschon told Handelsblatt, listing not just Mr. Trump but Britain’s exit from the European Union as the key threats to emerge in the past year.

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