The German banking ranks among the largest world. International major banks from Germany are among other things Deutsche Bank and the Dresdens bank

An enterprise is after "§1 of the German credit system law (KWG) Kreditinstitut if it operates banking transactions professionally or to an extent, which requires in commercial way a furnished business concern.

In Germany the Federal Institution for supervision of financial service (BaFin) exercises the supervision over credit institutes and institutes for financial service, which the practice of banking transactions must approve explicitly. Beginning of 2004 2292 credit institutes were certified to the course of business in Germany.

Banking transactions

Under banking transactions in the sense of the KWG are seized:

• Insert business: The acceptance of strange funds as inserts or other repayable funds of the public, if the requirement for repayment is not confirmed by a document in owner or order debenture bonds, without consideration for whether interest is recompensed.
• Loan business: The grant of cash advances and credits in blank.
• Discount transaction: The purchase of changes and cheques.
• Finance committee business: The acquisition and the sale of financial instruments in the own name for strange calculation.
• : The Verwahrung and the administration of securities for others.
• : The business designated in "§ 7 exp. 2 of the Investmentgesetzes.
• : Entering the obligation to acquire demands for loan before maturity.
• Warranty business: The assumption of endorsements, warranties and other guarantees for others.
• Giro business: The execution of the cashless money transfer and the clearing business.
• Issuing transaction: The assumption of financial instruments for own risk for placement or the assumption of equivalent warranties.
• E-money-business: The expenditure and the administration of electronic money.

These business covers however only the "“external business"” of the credit institute in the sense of the political economy. In addition come:

• the insert business opposite other credit institutes (interbank trade),
• the loan business opposite other credit institutes (interbank trade),
• the insert business opposite the issuing bank (to the refinancing).
  • This is basis for the fact that at all cash is in the circulation: The issuing bank leaves Kreditinstitut cash in a certain height, what obligates itself in response to pay money back in this height later to the issuing bank.

The KWG defines also exceptions: The German Federal Bank, the kreditanstalt fuer wiederaufbau, the social security institutions and the federal agency for work are for example no credit institutes in the sense of the law.

A clearing bank is within the financial sector a bank, which is not central bank.

The non-banks face the business banks as customers beside the central bank.

Structure

Of the German banking the three-columnar structure is characteristic. Thus the strict separation becomes into the columns loan banks (credit cooperatives and genossenschaftliche central banks), public institutes (savings banks and Landesbank) and credit banks designated. In the international comparison the consolidation degree is small and the portion of the public hand with approx. 45% high. The of the German banks is below average in the international comparison - this applies to all three columns. In the year 2003 own capital funds profitability amounted to only 0.7%. A cause for this are the sinking interest margins and the rising prevention of risk need. Meanwhile the prevention of risk sank clearly, among other things by the sales of putrid credits or Nonperforming so mentioned Loans.

In Germany for the comparison of the efficiency and performance of a bank the is usually consulted. (To the comparison: In the USA those applies for Cost Income reason as the most important economical index.)

See also

• Credit institutes in Germany

Related links

• bafin.de - official Website of the Federal Institution for supervision of financial service (BaFin).
• bundesbank.de - official Website of the Federal Bank.
• bundesrecht.juris.de - German law over the credit system

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