Banking in Germany

Euro used since 2002 in The Eurozone, the currency of 19 EU members. There are three types of banks in the country, namely private commercial banks, public sector banks and cooperative banks. Also, the number of online banks is increasing. Deutsche The Bundesbank is the country's central bank and the authority that regulates the German banking industry, The Federal Financial Supervisory. Provided by Authority ( BaFin ). Private commercial banks in Germany have the largest share of assets and play an important role in the export economy.

Private commercial banks are among the banks with the largest share of assets in the industry, accounting for 40% of assets. The competition rate among these banks is quite high and they are also in competition with each other. They play an important role in the export economy in Germany and finance a large part of international trade. According to the European Banking Federation's December 2022 report, they account for 88% of Germany's exports and control almost three-quarters of the German external network. Deutsche Bank is the largest among banks in this category and is the 11th largest bank in the world. The three largest banks in Germany are Deutsche Bank, Commerzbank and KfW, respectively. However, banks in this category are not as influential in the retail banking sector, with the three largest private commercial banks controlling only 15% of the retail banking sector.

In Germany, public banks consist of savings banks ( Sparkassen ), Landesbanken and DekaBank . DekaBank operates as the asset manager of the Savings Banks Finance Group. Public banks account for 25% of total banking assets and there are 371 savings banks in Germany. Savings banks are often organized as public law firms with their guarantors or owners and local governments, and their areas of influence are usually limited to those of local government. Savings banks do not compete with each other. Landesbanken was originally established as a central bank for savings banks, but in recent years they have become more involved in wholesale finance, investment banking and international business activities and have begun to rival commercial banks. In Germany, 6 Landesbanken belongs to the federal states and to the regional associations of savings banks.

The cooperative sector in Germany consists of 773 cooperative banks ( Volks - und Raiffeisenbanken ) and a central cooperative bank called DZ Bank AG. Cooperative banks constitute 53% of bank institutions and 12% of bank assets. These banks are usually managed by their own members, depositors and borrowers. Legally, such banks are authorized to support their members, who are half of their customers. They also provide banking services to the public. Cooperative banks, like savings banks, are regional and act on regional principles.

Cooperative and public banks are seen as more reliable and less risky than private commercial banks. Some cooperative banks have begun to pursue outward-looking strategies. Both types of banks cater more to local communities than to international visitors.

German banks, like other European countries, offer large-scale financial services. These services include current accounts, loans and overdrafts, mortgages, insurance, investment and savings accounts, digital and online banking, business banking and services for foreigners. Business banking is the set of financial services offered by German banks for start-up companies, established SMEs and multinational or individual employees doing business in Germany. German banks also offer special services for foreigners working in Germany, including cheap international money transfers.

Germany is the country with the highest Turkish population in Europe. According to the 2022 data from the German Federal Statistical Office, 1 million 458 thousand 360 Turkish citizens live in Germany. This figure does not include the number of Turks who acquired German citizenship. This high population number makes Turkish banking activities more active in Germany. The use of Turkish banks by Turks living in Germany has some advantages. Among them:

Banks to provide service in Turkish : Turkish banks provide services using the mother tongue of Turks living in Germany. In this way, it is possible for Turks to carry out their financial transactions in a more comfortable and understandable way.

Lower transfer fees : Money transfers between Turkish banks can usually be made with lower fees. This allows Turks to spend less on sending the money they earn in Germany to Turkey.

More favorable loan and interest rates for Turks : Turkish banks offer loan and financing packages specially prepared for Turks. Interest rates on these packages are also usually lower. This enables Turks to use loans on more favorable terms.

Some Turkish banks actively operating in Germany are:

» Isbank AG
İşbank is the first Turkish bank to open branches in foreign countries. It opened its first branch in Hamburg in 1932, but this branch was closed due to World War II. Later, it started its activities again in Frankfurt in 1976.

» Ziraat International Bank AG
Ziraat Bank AG is the largest private bank with Turkish capital in Germany and the European Union, with an equity of 250 million dollars. It opened its first representative office in Germany in 1964 and established its first branch in Frankfurt in 1988.

» DenizBank AG
DenizBank opened its first branch in Austria in 1996. It currently has an active branch network and 400 employees in Austria and Germany.

» GarantiBank International N.V.
GarantiBank opened its first branch in the Netherlands in 1990. It opened its first branch in Germany in 1999.

» Akbank AG
Akbank started its operations in 1998 in Frankfurt, Germany. In addition, the bank is the Deposit Protection Fund of the German Banks Association
Einlagensicherungsfonds. des Bundesverband Deutscher He is a volunteer member of Banken.

» KuveytTurk - KT Bank AG
KT Bank AG is the first bank in Germany and the Eurozone to offer services in accordance with the principles of participation banking since 2004. The headquarters of the bank is in Frankfurt/Germany.

» Credit Europe Bank
It is a bank of Turkish origin. Although the headquarters of Credit Europe Bank is located in Amsterdam, the origins of bank are based in Turkey. The bank was
established in Turkey in 1994 and its name was changed to Credit Europe Bank in 2006. Credit Europe Bank also has several branches in Germany and offers banking services in Germany as well. Credit Europe Bank offers credit cards, deposit accounts, investment accounts, online banking, international money transfers, consumer loans and other financial services in Germany. Today, Credit Europe Bank's operations in Turkey are transferred to Credit Europe Bank A.Ş. under the name.

Banks in Germany are divided into three separate groups. These are private banks, publicly owned savings banks ( Landesbanks ) and member-owned credit unions. The German banking system consists of approximately 1,800 banks, including 200 private banks, 400 public banks and 1,100 member-owned credit unions. There are also many foreign banks and financial institutions that are not headquartered in Germany but operate in Germany. For this reason, Germany is considered one of the largest banking centers in the world.

German banking is active in Turkey both through its representative offices and branches. Among the German banks with representation in Turkey, Aareal Bank AG ., Commerzbank AG, DEG- Deutsche Investitions-und Entwicklungsgesellschaft MBH, DZ Bank AG, KFW (Kreditanstalt Für Wiederaufbau) and the Landesbank Baden are located in Württemberg . The only German bank with a branch in Turkey is Deutsche Bank , which was established in 1987 and this bank only offers corporate banking services. In addition, although Hypovereinsbank does not have a representative or branch in Turkey, it cooperates with Yapı Kredi Bank.

Consolidation plays an important role in scaling the German economy. One of the most common causes of consolidation between savings banks and cooperative banks is stress. There may be more consolidation pressure in the coming years due to factors such as the low interest rate environment and banking regulations that have increased the capital needs of banks in recent years. German banks are particularly concerned that corporate finance may be affected and the lending capacity of banks may be restricted. However, according to the European Banks Association (EBF) data, loans extended to companies and self-employed individuals, accompanied by low interest rates and favorable financing conditions, increased by 4.3% in 2019 compared to the previous year and reached 974 billion Euros. Due to the Energy
Transition in Germany and the new EU Action Plan 'Financing Sustainable Growth ', banks have launched many initiatives to promote sustainable finance in recent years.

The European Central Bank (ECB) aims to increase investment and long-term loan demand in Germany with negative interest rates and large purchasing programs. The ECB seeks to achieve this goal by lowering rates along the entire yield curve. However, negative ECB rates reduce bank profitability, as banks cannot largely pass negative rates to customers. This situation also weakens the lending capacity of banks in the long run. The ECB's massive buyout programs are causing a sharp increase in excess liquidity in the banking system.

In conclusion, several important points regarding Germany's financial system stand out. Germany stands out as a country with a well-developed financial services infrastructure and serves bank loans as well as capital markets. Bank loans are an important source of finance, especially for small and medium-sized firms known as Mittelstand. However, factors such as low interest rates and excess liquidity reduce banks' profitability and weaken their long-term lending capacity. Banks are expected to take measures such as consolidation to cope with these challenging conditions and take initiatives to promote sustainable finance.