The Sparkassen-Finanzgruppe ("Savings Banks Financial Group") is a network of public banks that together form the largest financial services group in Germany and Europe by assets. Its name refers to local government-controlled savings banks that are known in German as , plural . Its activity is overwhelmingly located in Germany.
History
The , established in Hamburg in 1778, is widely viewed as the first modern savings bank. Other accounts emphasize the significance of the savings bank of Göttingen, founded in 1801, which was the first established with a municipal guarantor whereas earlier foundations had been initiated by merchants, clerics or academics (Hamburg later created its own municipal savings banks in 1827). In 1838, the Kingdom of Prussia adopted the first savings banks legislation (), which unified the legal status of the 234 savings banks then existing under its jurisdiction and put them under the regime of the respective local governments; it served as a model for other German polities.
Between 1850 and 1903, the idea of the municipal savings banks spread further, and the number of savings banks in Germany increased from 630 to 2834. In 1913, of the 1765 Sparkassen that operated in Prussia alone, about 90 percent belonged to either a city or a county (), while the remaining 10 percent were either private or belonged to an association. Throughout the 19th century, the services that Sparkassen could provide had been strictly restricted, but these restrictions were loosened as joint-stock banks, starting with Deutsche Bank, started competing for the collection of retail savings. In 1909, new legislation allowed the Sparkassen to offer checking and related payment accounts. This change fostered the creation of regional public entities that cleared payments between different Sparkassen, known as . The first was established in 1909 in Saxony, soon followed by those for Bavaria (1914), the Rhineland (1914), Thuringia (1915), Silesia (1916), and from 1916, the national which in 1918 became the Deutsche Girozentrale (DGZ).
Also during World War I, the Imperial German government leveraged the network of Sparkassen to place war bonds, marking the beginning of their activity in the securities space. In 1921, further legislative changes enabled them to underwrite and sell securities more broadly, thus allowing them to act practically as universal banks. The Sparkassen, however, were severely impacted by hyperinflation: their deposit base shrunk from nearly 32 billion marks in late 1918 (up from 19 billion in 1913) to a mere 608 million Reichsmarks at end-1924.
In 1934, all savings banks were designated as credit institutions under new banking legislation following the crisis of 1931. The savings banks group, designated from 1935 as , again participated in war financing before and during World War II. The savings banks in East Germany were nationalized and separated from the rest of the network in 1945, but reintegrated into it after German reunification in 1990.
Key concepts The Sparkassen-Finanzgruppe is highly idiosyncratic, and its description requires understanding of key notions that are unique to its German context.
Träger In the context of the Sparkassen-Finanzgruppe, the German word ("holder") refers to the owner-like relationship between a local government and a public-sector institution (), i.e. the . Examples of such local govern entities are municipality (), union of municipalities (Gemeindeverband) or district ()).
Träger implies a form of control that is not legally considered ownership, but it is functionally similar to ownership. This is because Sparkasse is an independent public entity, but the Träger holds governance rights that resemble ownership. As a result, most Sparkassen are overseen by locally elected politicians. The Träger position (German: Trägerschaft) cannot be sold, and it does not grant rights to the Sparkasse's financial surplus, which is typically retained or used for local public welfare projects.
Until the early 21st century, the Träger also provided explicit financial guarantees to the institutions they controlled, but these guarantees were mostly phased out under an agreement concluded on between a group of German negotiators and the European Commission represented by Competition Commissioner Mario Monti, known in German as the .
Regional principle The Regional Principle () stipulates that entities of the Sparkassen-Finanzgruppe such as Sparkassen or public insurers have a local monopoly within the group within the geographical area in which they are established, namely the territory of their Träger. It is established in the Sparkassen legislation (, German acronym SpkG) which is specific to each of the states of Germany () except Hamburg, which has no SpkG. The states of Hesse and Schleswig-Holstein have less restrictive legislation on the Regional Principle than the other German Länder, linked to the fact that, as in Hamburg, they have Sparkassen under the legal-form of joint-stock companies (Aktiengesellschaft) as opposed to public-sector entities.
Group entities In late 2020, the Sparkassen-Finanzgruppe included 520 member entities, as described in its 2021 Annual Report: 376 local savings banks (): 200,676 employees 6 regional banking groups (, including Landesbank Berlin which is directly owned by the DSGV): 33,502 employees 9 public insurance groups (): 26,680 employees 8 regional building societies (, abbreviated as LBS; sometimes translated into English as "building and loan associations") and 7 LBS real estate companies: 7,392 employees DekaBank (asset management and wholesale financial services): 4,711 employees (IT services): 4,474 employees Deutsche Leasing and other leasing companies: 3,441 employees (publishing and other group services): 2,100 employees Berlin Hyp (property lending): 593 employees (car loans and consumer credit): 530 employees 3 factoring companies: 403 employees Sparkassen Rating und Risikosysteme GmbH (risk management): 311 employees SIZ GmbH (IT security): 281 employees 51 capital investment companies: 179 employees
National and regional associations
The Deutscher Sparkassen- und Giroverband (DSGV, self-translated as "German Savings Banks Association") is a nonprofit association, based in Berlin and founded in 1924.Fakten, Analysen, Positionen: Zur Geschichte der Sparkassen in Deutschland Nr. 45, Publisher: Deutscher Sparkassen- und Giroverband, P.10., ; accessed: 13.06.2011 It operates as an umbrella organization to facilitate decision-making processes, coordinate strategy, and represent its members' political and regulatory interests at the national and international levels.DSGV-Website ; accessed: 13.06.2011
The 12 regional associations () are statutory bodies, of which savings banks Träger are statutory members. They are responsible for coordination between savings banks in a region, and manage the regional sub-funds that participate in the Sparkassen-Finanzgruppe's institutional protection scheme (except in Berlin where a special arrangement is in place). They also act as auditors and operate regional savings bank academies for educational and training purposes.DSGV-Website-Organisation-Verbände ; accessed: 13.06.2011
They are, from north to south: with head office in Kiel, covering Schleswig-Holstein; in Hamburg, covering Bremen and Hamburg; in Berlin, covering Berlin; also in Berlin, covering Brandenburg, Mecklenburg-Vorpommern, Saxony, and Saxony-Anhalt; in Hanover, covering Lower Saxony; in Münster, covering the northeastern part of North Rhine-Westphalia; in Düsseldorf, covering the southwestern part of North Rhine-Westphalia; in Frankfurt and Erfurt, covering Hesse and Thuringia; in Mainz, covering Rhineland-Palatinate; in Saarbrücken, covering Saarland; in Stuttgart, covering Baden-Württemberg; in Munich, covering Bavaria.
In addition, a dedicated association, the (VFS), exists for Sparkassen that are (or recently were) joint-stock companies. The latter are members of both the respective regional Sparkassenverband and the VFS.Verband der deutschen freien Sparkassen e.V. ; accessed: 13.06.2011
Sparkassen
The Sparkassen work as commercial banks in a decentralized structure.DSGV-Website-Organisation-Sparkassen; accessed: 13.06.2011 Each savings bank is independent, locally managed and concentrates its business activities on customers in the territory in which it is situated under the Regional Principle. In general, Sparkassen are not profit oriented. The Träger of the savings banks are usually single municipalities or several municipalities within a district.Klaus Ulrich: Die deutsche Sparkassenorganisation, Deutscher Sparkassen Verlag GmbH, P.15/16.
As banks under public law, the vast majority of Sparkassen have a public mandate which requires that they serve their local stakeholders and local communities. Five institutions known as "free Sparkassen" () are or recently were joint-stock companies. They are: , , Hamburger Sparkasse, Sparkasse zu Lübeck, and Sparkasse Mittelholstein. Their Träger are charitable foundations. They are members of the VFS, as is despite its current public-sector legal status.
Fulfilling public interests is still one of the most significant characteristics of public banks in general and the savings banks in particular. Although public interest is very unspecific, objects of those companies are usually: providing financial and monetary services in economically underdeveloped regions; supporting saving processes and accumulation of capital; strengthening competition in the banking industry.Andrea Kositzki: Das öffentlich-rechtliche Kreditgewerbe: eine empirische Analyse zur Struktureffizienz und zur Unternehmensgröße im Sparkassensektor, Dt. Universitäts-Verlag, Wiesbaden 2004, , P.13.; Maik Rösler: Der Genossenschaftliche Bankensektor, Grin-Verlag 2008, , P.14
The total assets of the Sparkassen amount to about €1 trillion. The 431 savings banks operate a network of over 15,600 branches and offices and employ over 250,000 people.Das Profil, Publisher: Deutscher Sparkassen- und Giroverband, P.3. ; accessed: 13.06.2011 Savings banks are universal banks and provide the whole spectrum of banking services for private and commercial medium-sized customers. 50 million customers maintain business activities with savings banks.Das Profil, Publisher: Deutscher Sparkassen- und Giroverband, P.4. ; accessed: 13.06.2011 Although independent and regionally spread, the savings banks act as one unit under the brand Sparkasse with its iconic logo and recognizable red hue.
The size of savings banks differs widely depending on the economy in their region. While the biggest, Hamburger Sparkasse, had total assets of €37.7 billion and 5,500 employees in 2009, the smallest (Stadtsparkasse Bad Sachsa) had only €129.6 million in assets and 45 employees.
Landesbanken
The Landesbanken are mostly owned by the regional savings banks through its regional association and the respective federal states. In total, the assets of the Landesbanks have shrunk by 45 percent, or more than €702 billion, between end-2008 and end-2017.
The Landesbanks have traditionally acted as central financial services providers for regional savings bank association and as the "main bank" of the respective . They are also local banks, mortgage banks and general commercial banks. Their duties and powers are codified in the individual banking laws of the Länder (Landesbankengesetze). The specific tasks for the savings banks include central clearing for cashless payments and liquidity funding for the regional savings banks. They also provide many services for the savings banks in the region in securities and cross-country businesses. In contrast to savings banks, they do wholesale banking rather than retail banking.Klaus Ulrich: Die deutsche Sparkassenorganisation, Deutscher Sparkassen Verlag GmbH, P.36-38.