The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Germany: Banks still dominate funding

Much of the funding of Germany’s economically vital SMEs continues to come from bank loans. Private placements and specialized bonds are of growing importance, but sometimes problematic from a risk point of view.

The financing of small and medium-sized enterprises is of paramount importance in Germany as these firms – the famed Mittelstand – are the bedrock of the economy. They contribute €1.3 trillion to domestic GDP and the larger SMEs – those with a turnover of between €10 million and €1 billion – account for 43% of Germany’s GDP.

Of Germany’s 3.7 million corporates, 99.8% are SMEs or mid-market enterprises (MMEs) and 71% of these companies, 2.17 million firms, have a turnover of less than £250,000. The country also has a higher percentage of larger medium-sized entities than the EU average: 17% compared with 8%.

SMEs in Germany tend to be conservatively run, family-owned businesses that have traditionally financed themselves through the country’s extensive regional banking network – 42.4% of loans to Mittelstand companies are made via savings banks (Sparkassen) and Landesbanken. Large private banks have 24.4% of the market and the cooperative banks 17.9%.

 

The bonds between Mittelstand firms and their banks are strong and despite growing efforts by institutional investors and non-German banks to prise open this market, bank lending will likely continue to dominate.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree