2. Bank and Banking System

Transcription

1 2. Bank and Banking System 2.1 The Concept Bank Legal Definition German Banking Act (KWG) Classification of the Banking Business Areas 2.2 Basic Structure of the German Banking System Universal Banks Specialized Banks 12

2 2.1 The Concept Bank Legal Definition Kreditinstitute sind Unternehmen, die [ ] Bankgeschäfte [ ] betreiben. 1 (1) KWG Banking Business ( Bankgeschäfte ): 1. Deposit banking 6. Investment management 2. Transactions in covered bonds 7. Investment business (since July 2005) 8. Loan trading 3. Credit business 9. Guarantee business (cash loan und acceptance 10. Giro business credit) 11. Issuance of securities 4. Bill-broking 12. E-money business 5. Financial commission business 13

3 2.1.2 German Banking Act (KWG) Banks are subject to the German Banking Act (KWG) Institution, wich are subject to KWG (please see also next slide) Credit Instututions (Banks) Financial Service Institutions Financial Companies Institutes in terms of the KWG Banking supervision as protector of depositors with a focus on risk Adjusting the listing of financial companies as required 14

4 Institutions, which are covered by KWG (besides credit institutions): Investment Banks, operate in the following fields: 1. Investment intermediation 5. Third country deposits 2. Acquisition advisory 6. Financial transfer business 3. Portfolio management & 7. Business in foreign currency cash maintenance 8. Credit card business 4. Third-party proprietary trade Financial companies, operate in the following fields: 1. Private & public equity 2. Acquisition of outstanding debt 3. Leasing business 4. Proprietary trading 5. Investment advisory 6. Corporate finance advisory 7. Financial brokerage 15

5 2.1.3 Classification of the Banking Business Areas a) Product Range-Oriented Differentiation (Büschgen/Börner, p.17 f.) Traditional product range Granting or taking out loans Services of money and credit transactions and capital flows Other financial services Classification by means of on-balance sheet activity Product range enlargement Provision i and establishment t of bank facilities Provision and establishment of deposit accounts Provision and establishment payment and clearing services Proprietary trade Bank activities from the customer s perspective p 16

6 b) Task-Oriented Differentiation (see Hartmann-Wendels et al., p.13 ff.) Banks do Commercial Banking Investment Banking Financial intermediation Deposit taking Trading support on financial markets Capital transfers to capital acquirer (loans and investments) 17

7 c) Function-Oriented Differentiation Banks are service companies, which try to achieve the transformation function of the financial markets through intermediation, i.e.: Liability Diversification Information production Special regulation (?) Challenge: The inclusion of investment banking requires an extensive interpretation of the transformation functions ( information intermediation ). 18

8 2.2. Basic Structure of the German Banking System Moderate universal banking system with some specialized banks Universal bank: Financial intermediary, who provides all banking activities Three main groups of universal banks: 3-Säulen-Modell Private banks (Private Kreditbanken) Public banks (öffentlich-rechtliche Kreditinstitute) Cooperative banks (genossenschaftliche Banken) Large number of credit institutions (with a strong trend to consolidation) 19

9 German Banking System (see Hartmann-Wendels et al., p.26 ff.) Translations are not always helpful below this level. Universal Banks (Kap.2.2.1) Special Banks (Kap ) Kreditbanken Großbanken Regionalbanken Sonstige Banken Zweigstellen ausländischer Banken (branches of foreign banks) Sparkassen/ Girozentralen Genossenschaftsbanken Realkreditinstitute Bausparkassen Direktbanken Kapitalanlagegesellschaften Wertpapiersammelbanken Kreditinstitute mit Sonderaufgaben 3-Säulen-Modell 20

10 Universal Banks a) Kreditbanken Großbanken The few largest private banks, traditionally: Deutsche Bank, Dresdner Bank, Commerzbank actually: Deutsche Bank, Bayrische Hypo- und Vereinsbank, Commerzbank, (Postbank) International ambitions (often frustrated) Hausbanken of the largest German industry groups Regionalbanken und sonstige Kreditbanken Formerly mainly regional banks Today also banks that do not fit into the traditional scheme Zweigstellen ausländischer Banken (branches of foreign banks) Increasing number of branches of foreign banks in Germany 21

11 b) Sparkassen/Landesbanken Banks owned by a public entity: The 434 Sparkassen (savings banks?) are owned by a municipality or a district, the 10 Landesbanken were originally owned by the states. After several crisis and consolidation activities, Landesbanken are often partly owned by Sparkassen or other Landesbanken. Landesbanken shall serve as central banks for the Sparkassen, but have often developed rather different ambitions. Public Contract Promotion of thriftiness and wealth accumulation Credit supply for the population of the particular region Support of the medium-sized enterprises and of the economically weak population (the latter especially in former times) 22

12 Anstaltslast und Gewährträgerhaftung (up to 2005) The public entity is liable to the extent of its property for the Sparkassen Landesbanken Intermediary for the Sparkassen and the Länder Hausbanken of the Länder 23

13 c) Genossenschaftsbanken E.g.: Volks- und Raiffeisenbanken, Spar- und Darlehenskassen Most numerous German banking group (1184) Originally founded to help poor farmers, craftspeople and small businesses Owned by the members, acting in their interest After a consolidation process, only two central banks remain in the group (DZ-Bank and WGZ) Liable equity consists of paid-in capital of the members retained earnings Haftsummenzuschlag (to be brought up by the members in case of bankruptcy only) Only regional business activities 24

14 d) 3-Säulen-Modell Comparison of the Sectors Private Kreditbanken Sparkassensektor Genossenschaftliche Kreditinstitute explicit it objectives profit maximization public contract: promotion of the members of the Genossenschaft: shareholder h or promotion of thriftiness i and provison of banking stakeholder approach wealth accumulation services social obligation of credit supply for the supply of better and more property population of the particular convenient products region social mission implicit objectives economic power area-wide provision of banking services and regional competition profit 25

15 Private Kreditbanken Sparkassensektor Genossenschaftliche Kreditinstitute derived principles of operation private-sector autonomy all action is tied to law (Sparkassen laws) self-help self-responsibility regional principlep self-administration prohibition of competition in the sector legal forms all legal forms of the public institutions Genossenschaft private-sector, except sole proprietorship (Freie Sparkassen: BGB association, foundation) private legal form possible (if incorporated) 26

16 Private Kreditbanken Sparkassensektor Genossenschaftliche Kreditinstitute corporate depends on legal form, Verwaltungsrat Generalversammlung institutions eg e.g. AG: (Trägerversammlung) (members) Hauptversammlung Vorstand Aufsichtsrat (shareholders) Aufsichtsrat (Kreditausschuss) Vorstand Vorstand liability equity equity equity (up to 2005: Gewährträgerhaftung and Anstaltslast) + possibly Haftsumme structure concerns containing major banks 3-staged structure with usually mid-sized institutes Formerly 3-staged structure with partially very small institutes 27

17 Specialized Banks Realkreditinstitute Long-term housing credits and state financing Former: Privilege to refinance through Pfandbriefe and Kommunalobligationen on the capital market (similar to covered bonds) Deregulation led to very risky new business models (see HRE scandal) Bausparkassen Idea of an autarkic community of savers to finance private housing Autarky as basis for interest rate guarantees, but uncertainty about the date of the granting of the loan Learning contracts, as debtors prove their ability to save before getting the loan Seemingly fragile business concept, but strong resilience in the crisis Direktbanken Modern communication technology (telephone, internet) to reduce costs Limited business concept, often only private customers No special legal provisions 28

18 Kapitalanlagegesellschaften g (investment companies) Investment of clients money in Funds Investmentgesetz (formerly Gesetz über Kapitalanlagegesellschaften) Wertpapiersammelbanken (collective security deposit banks) do exactly this for the banking community Kreditinstitute mit Sonderaufgaben Furtherance of special groups or purposes 29

19 bank specialization with competition specialization with cooperation economic policy social and welfare policy Postbank () () () Pfandbriefbanken () () Bausparkassen () () Kapitalanlagegesellschaften Wertpapiersammelbanken Bürgschaftsbanken () Kreditinstitute mit Sonderaufgaben in private legal form AKA Ausfuhrkredit- Gesellschaft IKB Deutsche Industriebank DVB (Deutsche Verkehrs- Bank) (owned by the DZ-Bank) Liquiditätskonsortialbank (von AKA verwaltet) Privatdiskont t AG (in AKA) () (see KfW) (see KfW) system stability 30

20 Öffentlich-rechtliche Sonderkreditinstitute bank specialization with competition specialization with cooperation economic policy social and welfare policy Kreditanstalt für Wiederaufbau (KfW) () Landwirtschaftliche Rentenbank () () (Deutsche Ausgleichsbank, merged with KfW in 2003) Deutsche Siedlungs- und Landesrentenbank (DSL- Bank), since 2000 in Postbank-Gruppe 31