German Sparkassen (Savings Banks)
A Commentary on a Case Study


By C.V.J. Simpson
April 2013
Civitas
Distributed by
ISBN: 9781906837464
52 pages, Illustrated
$22.50 Paper original

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Commentators across the political spectrum are pointing to the German system of local banks as a model for Britain to emulate. Much like our own banks, the big German commercial banks cut lending to businesses after the crisis in 2008, but the local German Savings Banks increased their loans, providing vital support for the wider economy in difficult times. In this report, Christopher Simpson explains how these local German Savings Banks (Sparkassen) operate. He describes the history, structure and organisation of the Sparkassen, which are only allowed to lend within a geographically defined area and, as a result, develop close relationships with their customers. They are publicly-owned but independent organisations with the 'common good' objective of supporting sustainable economic development rather than maximising profit. They are a key reason behind the success of Germany's formidable 'Mittelstand' sector of small and medium-sized enterprises. In 2010 they funded over half of new business start-ups in the country. The Association of German Sparkassen granted Simpson unique access to their records for this report, allowing him to describe an actual example of how a German Savings Bank assesses an application for finance. While Britain's banks regularly turn away successful businesses, Simpson shows how a local Savings Bank provided crucial support to a cutting-edge exporter with 800 employees during the worldwide recession. This concrete example provides a strong insight into the causes of German economic success.

 

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