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Capital Markets

Luring banks back to the Mittelstand

KfW's platform to securitize portfolios of loans to SMEs in Germany has broadened opportunities for the banks involved. It is far from clear, though, that these lenders have taken the steps needed to enhance margins on this business. Katie Martin reports.

Suhlrie: supporting the
Mittelstand's access to
loans through securitizations
and refinancing is crucial in
a country where such a high
proportion of companies
rely on bank funding





THE CAPITAL MARKETS are producing new ways for banks to create a profitable business from lending to Germany's small and medium-size companies – the Mittelstand – and KfW is playing a leading role. But evidence of better risk management in lending is scarce.

Foreign investors can breathe one small sigh of relief. If they found the name of Germany's development banking group, Kreditanstalt für Wiederaufbau, difficult to pronounce, they no longer need to bother trying. Its name in the capital markets is now simply KfW.

Splitting up KfW That is the most cosmetic of a series of changes at the group over the past year. It has spun off its project- and export-finance division, keeping it within the group but allowing it to operate autonomously under the brand name of KfW Ipex Bank. And it has incorporated DtA, which was a specialist development firm for start-up businesses, bringing it closer to KfW's existing small and medium-size business operations.

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