Banking in Germany
Encyclopedia
Banking in Germany is a highly leveraged industry, as its average leverage
ratio (assets divided by net worth) as of 11 October 2008 is 52 to 1 (while, in comparison, that of France
is 28 to 1 and United Kingdom
is 24 to 1); its short-term liabilities are equal to 60% of the German GDP or 167% of its national debt.
The private customer mostly has to choose between two kind of banks: (A) private banks, and (B) cooperative banks
and public banks.
(A) are found in all cities. Postbank
, Deutsche Bank
, HypoVereinsbank
, Commerzbank
and Dresdner Bank
were acquired by Commerzbank
) - regrouped as Cash Group
(B) - are found almost everywhere, and are exclusive in smaller villages. Principal banks include: Sparkasse and Volksbank
.
ATM
(Geldautomat) are on nearly every corner. However, customers mostly have to use their bank's ATM with their debit card
if they don't want to pay a fee. Cash Group
offers free ATM
through the group.
Using a credit card
(Visa/Mastercard
/Amex
) from a German bank in any German ATM
generates a fee of about 3%. Most people prefer to use their EC
/Maestro
debit card
.
Many physical payments are still made in cash, but increasingly, Germans are using their EC
/Maestro
.
Online payments are done mostly either with direct debit
(Lastschrift) or with credit card
.
Most of the banks offer a free main account (Girokonto) as long as the customer deposits a minimum amount regularly (> 1000€ income each month). Online banks such as ING Diba or comdirect offer cheaper service and free credit cards.
Leverage (finance)
In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives. Important examples are:* A public corporation may leverage its equity by borrowing money...
ratio (assets divided by net worth) as of 11 October 2008 is 52 to 1 (while, in comparison, that of France
Banking in France
The Banking industry in France has, as of 11 October 2008, an average leverage ratio of 28 to 1 and its short-term liabilities are equal to 60% of the French GDP or 128% of its national debt....
is 28 to 1 and United Kingdom
Banking in the United Kingdom
Banking in the United Kingdom can be considered to have started in the Kingdom of England in the 17th century. The first activity in what later came to be known as banking was by goldsmiths who, after the dissolution of English monasteries by Henry VIII, began to accumulate significant stocks of...
is 24 to 1); its short-term liabilities are equal to 60% of the German GDP or 167% of its national debt.
Market overview
Germany has universal banking.The private customer mostly has to choose between two kind of banks: (A) private banks, and (B) cooperative banks
Cooperative banking
Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world....
and public banks.
(A) are found in all cities. Postbank
Deutsche Postbank
Deutsche Postbank AG is a German retail bank with headquarters in Bonn. Postbank was formed from the demerger of the postal savings division of Deutsche Bundespost in 1990. It became a wholly owned subsidiary of Deutsche Post in 1999, and was partially spun out on the Frankfurt Stock Exchange in 2004...
, Deutsche Bank
Deutsche Bank
Deutsche Bank AG is a global financial service company with its headquarters in Frankfurt, Germany. It employs more than 100,000 people in over 70 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets...
, HypoVereinsbank
HypoVereinsbank
UniCredit Bank Aktiengesellschaft is the sixth-largest private German financial institution, with a strong presence in Bavaria. The company is based in Munich, and together with Deutsche Bank, Dresdner Bank, Commerzbank and Deutsche Postbank, it belongs to the Cash Group...
, Commerzbank
Commerzbank
Commerzbank AG is the second-largest bank in Germany, after Deutsche Bank, headquartered in Frankfurt am Main.-Activities:Commerzbank is mainly active in commercial bank, retail banking and mortgaging. It suffered reversals in investment banking in early 2000s and scaled back its Securities unit...
and Dresdner Bank
Dresdner Bank
Dresdner Bank AG was one of Germany's largest banking corporations and was based in Frankfurt. It was acquired by competitor Commerzbank in December 2009.- 19th century :...
were acquired by Commerzbank
Commerzbank
Commerzbank AG is the second-largest bank in Germany, after Deutsche Bank, headquartered in Frankfurt am Main.-Activities:Commerzbank is mainly active in commercial bank, retail banking and mortgaging. It suffered reversals in investment banking in early 2000s and scaled back its Securities unit...
) - regrouped as Cash Group
Cash Group
Cash Group is a cooperation of the four largest German private banks and their subsidiaries, in which they mutually waive ATM usage fees for their customers. It is not an interbank network but uses the pre-existing girocard network...
(B) - are found almost everywhere, and are exclusive in smaller villages. Principal banks include: Sparkasse and Volksbank
Volksbank
Volksbank was founded in 1850 and is a retail bank in Central Europe based in Vienna, Austria. It currently operates in Austria, Germany, Bosnia and Herzegovina, Croatia, the Czech Republic, Hungary, Malta, Romania, Serbia, Slovakia, Slovenia and Ukraine.There are also 1,156 independent local...
.
ATM
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
(Geldautomat) are on nearly every corner. However, customers mostly have to use their bank's ATM with their debit card
Debit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...
if they don't want to pay a fee. Cash Group
Cash Group
Cash Group is a cooperation of the four largest German private banks and their subsidiaries, in which they mutually waive ATM usage fees for their customers. It is not an interbank network but uses the pre-existing girocard network...
offers free ATM
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
through the group.
Using a credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
(Visa/Mastercard
MasterCard
Mastercard Incorporated or MasterCard Worldwide is an American multinational financial services corporation with its headquarters in the MasterCard International Global Headquarters, Purchase, Harrison, New York, United States...
/Amex
AMEX
AMEX, AmEx or Amex may refer to:*American Stock Exchange*American Express, a global financial services corporation*American Express Community Stadium, association football stadium in Brighton, England, currently sponsored by American Express...
) from a German bank in any German ATM
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
generates a fee of about 3%. Most people prefer to use their EC
Eurocheque
The Eurocheque was a type of cheque used in Europe that was accepted across national borders and which could be written in a variety of currencies....
/Maestro
Maestro (debit card)
Maestro is a multi-national debit card service owned by MasterCard, and was founded in 1990. Maestro cards are obtained from associate banks and can be linked to the card holder's current account, or they can be prepaid cards...
debit card
Debit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...
.
Many physical payments are still made in cash, but increasingly, Germans are using their EC
Eurocheque
The Eurocheque was a type of cheque used in Europe that was accepted across national borders and which could be written in a variety of currencies....
/Maestro
Maestro (debit card)
Maestro is a multi-national debit card service owned by MasterCard, and was founded in 1990. Maestro cards are obtained from associate banks and can be linked to the card holder's current account, or they can be prepaid cards...
.
Online payments are done mostly either with direct debit
Direct debit
A direct debit or direct withdrawal is an instruction that a bank account holder gives to his or her bank to collect an amount directly from another account. It is similar to a direct deposit but initiated by the beneficiary...
(Lastschrift) or with credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
.
Most of the banks offer a free main account (Girokonto) as long as the customer deposits a minimum amount regularly (> 1000€ income each month). Online banks such as ING Diba or comdirect offer cheaper service and free credit cards.