Taken as a single entity, Germany's savings bank sector is the second largest financial institution in the country. And, unlike the country's top 10 banks, it has been growing since 2008.

Sparkassen and top 10 German banks

The German sparkassen (savings banks) system is a complex, loosely affiliated group of 422 straightforward banks. Many do not publish individual annual figures on a timely basis, and a mutual support mechanism means that they are held to be a single financial group in certain respects such as credit ratings. They are also almost entirely focused on the local household saving and lending market, with little international profile.

That makes them easy to overlook, but their significance in Germany is substantial. The German Savings Banks Association (DSGV) makes data available for the sector as a whole, which shows that the franchise taken as a single financial entity would be the second largest asset base in the country after Deutsche Bank. If taken together with the top 10 banks in Germany, sparkassen would account for 14.3% of assets.

Sparkassen and top 10 German banks

Perhaps most significantly, and in stark contrast with the large wholesale banks that are much more exposed to international market conditions, the sparkassen are growing. The total assets of all of Germany’s top 10 banks shrank over the period from 2008 to 2011. The mildest decline appears to be at Commerzbank, but it must be remembered that this includes the acquisition of its peer Dresdner Bank in 2008, which should have almost doubled the bank’s assets. Instead, deep problems with exposures to structured credit markets have resulted in a massive deleveraging of the combined group. Over the same period, the sparkassen assets grew, albeit by a modest 2.5%.

Sparkassen and top 10 German banks

Perhaps counter-intuitively for banks that specialise in savings, the sparkassen market share of deposits appears lower than that for assets. However, this may be misleading. A number of the regional landesbanken (state-owned banks) act as cash management banks for the sparkassen that are active in their region, so they hold deposits from or on behalf of the sparkassen themselves.


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