Banking Sector Germany

1 HISTORY GERMAN BANKIN INDUSTRY

The development of the German banking industry is closely related to Germany’s history and its evolving industry. The development of the banking sector was a respond to the industrialization and the accompanying financial needs.

Until 1870 the banking sector was dominated by private bankers and influential “banking families”. Some of them are still known today, such as Sal. Oppenheim jr. & Cie.

The privat bankers were financed only by equity capital. However as the industrialization went on and the need for money and financing constantly grew, this solely equity was not sufficient anymore to finance the occurring capital intensive industries. In response of that the private bank Abraham Schaaffhausen was transformed into the first incorporated bank on August 28, 1984. Following this example more and more incorporated banks occurred, especially in the area of the Rheinland where the capital intensive industry was very active. Still today the most important banking centers are in this area. The aim of the cooperated bank was to focus on financing the industry.

In the second half of the 19th century and in the beginning of the 20th century, the German banking industry was growing very fast and successful. This growth however was accompanied with a steady concentration process and primarily the private banking houses were diminishing. After the Second World War in 1947/48 those concentrated big banking houses were broken down and 30 successor institutes were founded in West Germany. Later in 1952 those institutes were again merged to three bigger institutes and in 1957 renamed to Deutsche Bank, Dresdner Bank and Commerzbank. Those three banks still form part of the commercial