Germany’s third-largest bank, KfW, is a development bank unlike any other – designed originally by the UK and US military governments specifically to complement a fragmentation of German banking they enforced.
Its remit now ranges from student loans to financing Germany’s renewable energy drive through to occasional transactions for the government in the national interest, such as last year’s thwarting of a Chinese acquisition.
How does such an organ of the government avoid distorting the market, let alone survive state aid rules? The EC examined it closely in 2002 and obliged it to spin out project and export finance.
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