Losing Business

The Trouble With Savings

Sparkasse vorhang
The Sparkassen are giving in to the requests of the finance group.
  • Why it matters

    Why it matters

    Savings and loan banks, long considered a stable pillar of banking in local communities, are in danger of losing part of their core business.

  • Facts


    • Specialized credit banks have seen their market share in credit loans surge nearly 50 percent in the last five years, while savings and loans banks have suffered.
    • Profit margins for installment loans have risen to a record 5.5 percent.
    • Specialized credit banks sold a record of nearly €150 billion in loans in 2014, up 6 percent from the previous year.
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German consumers are in a buying mood – and have been for a number of years now. The economy is flourishing, jobs are secure and interest rates are at historic lows – all perfect conditions to boost consumption.

When the prices for cars, furniture, kitchen appliances and TVs exceed the household budget, some financial firms are eagerly standing by with short-term financing deals.

Such installment loans are enjoying growing popularity in a nation that has long been known for saving rather than spending its hard-earned money.

But not all financial firms are able to rub their hands in glee. Market watchers say that a massive shift is underway in the German banking landscape.

The winners are a new breed of banks that specialize in short-term installment loans – banks like Spain’s Santander or Germany’s Targobank.

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