Germany’s political battles may be over but the war over reform of the country’s banking sector has only just begun. Jan Wagner reports.While some kind of political truce has been reached in Germany, the real fight for financial reform rages on. By the standards of modern banking systems everywhere, Germany’s three-pillar system of private banks, state-owned savings banks (Sparkassen) and co-operative banks is antiquated and inefficient.
DEPFA has gone from strength to strength since it split from the Aareal mortgage bank and moved to Dublin. Jan Wagner reports from Frankfurt and Dublin on the most profitable bank active in Germany today. Germany’s mortgage banks have been partying recently. In May, Eurohypo held a bash to celebrate the 10th anniversary of the “Jumbo Pfandbrief”. Since its introduction, the high-volume Jumbo has spawned a €600bn European market.As the market leader, Eurohypo and its peers whooped it up. Attractions included plenty of champagne and an elephant installed in front of the Frankfurt stock exchange. Another Pfandbrief conference, replete with champagne, was hosted in June.
In 2004, Germany saw its first ‘true sale’ securitisation, the birth of a non-performing loan market and the founding of a new exchange, reports Jan Wagner.Last year was another difficult one for German banks. Contrary to expectations, equity markets did not perform particularly well and neither did the economy. Despite this, German banks will probably regard 2004 as one of their better years as the financial industry matured greatly, thanks to several important innovations. As 2004 began, Germany’s hedge fund industry was born when the direct sale and domiciling of these products in the country was permitted for the first time.