Savings Banks

Too Small to Think Big

thomas geisel ddorf mayor after sparkasse profits source dpa 8 feb 2016
Germany's municipally owned savings banks, called Sparkassen, are notoriously quasi-autonomous. Now under great economic pressure, they are resisting calls to consolidate to survive. Here, a Carnival celebration float this month in Düsseldorf depicting the city's mayor, Thomas Geisel, trying to get at the profits of the local bank, Stadtsparkasse Düsseldorf, which wants to reinvest its profit into its own reserves.
  • Why it matters

    Why it matters

    Germany’s small savings banks are under increasing pressure to consolidate, but many are using their political independence to resist calls to merge.

  • Facts


    • The German regional and state savings bank network has more than 400 institutions, from tiny local banks to large state-owned regional banks.
    • Rising costs and falling returns are pressuring them to consolidate.
    • Another German network of small banks, called “Volksbanken” or “Genossenschaftsbanken,” have benefited by consolidating in recent years.
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Germany has too many banks, more than any country in the world.

That’s especially true of its savings banks, which are often run by local cities and municipalities.

Take the one in Bad Sachsa in northern Germany, with just 40 employees.

After 129 years of proud independence, it is contemplating the unthinkable — a merger.

It’s brutal out there for small banks in the euro zone’s near-zero interest rate deep freeze. Their returns are miserable and their costs are rising, and often, their customers are dying off in Germany’s aging society.

“We are well aware that the savings banks landscape is changing fast,” said the chairman of Bad Sachsa’s supervisory board, Axel Hartmann, who is also the town’s mayor. “We are totally open to possibilities.”

But Bad Sachsa is an exception.

The leaders of Germany’s vast “Sparkassen” sector are not as open as Mr. Hartmann is to moving with the times, it appears. Many in wealthier communities want to preserve their comfortable independence, despite signs some in the industry see of a coming crisis.

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