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Low rates hobble Germany’s public banks

Germany’s public-sector banks are not meant to be profitable – they have a social function – but even though stresses will continue, savings banks have found ways to work with the Landesbanks.

Reflective mood: More than 900 Sparkassen branches closed in 2016

Reichenau am Bodensee, which lies about 10 kilometres west of Konstanz in southern Germany, is a pretty little town. It has an eighth-century Benedictine monastery, picturesque half-timbered houses and a handful of welcoming Gaststätten. And like every German town and city, it has its obligatory savings bank, Bezirkssparkasse Reichenau. 

With assets of a little over €1 billion at the end of 2016, deposits of just over €600 million, loans of €950 million and a workforce of 132 employees, Reichenau’s savings bank is hardly a global systemically important bank. But it is remarkable in one respect. According to one recent study, it is the most efficient savings bank, or Sparkassen, in Germany among those with a balance sheet of more than €300 million.

The survey of productivity among German and Austrian savings and cooperative banks was undertaken by Confidum, a Swiss financial management consultancy. Its managing director, Christof Grabher, says that in today’s interest rate environment, traditional measures of efficiency in the banking industry have lost their relevance. 

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