Public sector banks leverage traditional strengths for a new style of profitability
BE CAREFUL WHAT you wish for. When a number of private-sector banks in Germany launched their broadside against the Landesbanken in the mid-1990s, their agenda seemed clear enough. If the Landesbanken could be stripped of their Anstaltslast and Gewährträgerhaftung guarantees, which amounted to state aid and which effectively protected their very high credit ratings, they would no longer have access to the artificially cheap funding that had allowed them to grow fat and lazy on the back of easy arbitrage-driven earnings.
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