Saturday, April 13, 2013

ECOBATE 2013 - 4 Germany won, UK regain? Local bank challenge

Some killer history facts for the local bank scene were given by one of the final speakers at the public session at ECOBATE 2013 in Winchester: Dr Karl-Peter Schackmann-Fallis, Executive Board Member, German Savings Banks Association. 

The 1817 UK Savings Bank Act was followed by the establishment of nearly 500 savings banks by 1820. In Germany at the time there were only half that number. Currently the numbers are: Germany 422 (15,000 branches), UK very few.

The independent banking sector in Germany which comprises these savings banks and 1100 co-operative banks is not glamourous and is not a cash cow for financial investors. The savings banks themselves are not private banks or co-operatives and above all, are not state banks. They add to banking diversification and are decentralised, local, and with independent management. Short decision making time and a lot of local information for businesses are valuable features that are not available from centralised banks. IT is centralised across the savings banks (Sparkassen), giving economy of scale. Savings banks bring added competition to the private banks and co-operatives and  success has been hard earned and tested over 200 years. Whilst the local economy grows by supplying loans to small, mostly family-owned businesses, net income expands the savings banks' reserves and grows their equity for more lending. Grants to many local good causes are made.

He encouraged the UK to move toward a similar savings bank model. He advocated new local retail banks with a legal framework in place to prevent buyouts by big banks.  Referring to the UK's 1817 Savings Bank Act and its charitable nature he said 'the UK set Germany a fine example'. 200 years later will we learn from Ye Proven Olde English export idea?

View Dr Schackmann-Fallis' talk on video: The Information 
ECOBATE 2013 was hosted by Prof Richard Werner, Director of the Centre for Banking, Finance & Sustainable Development, University of Southampton.
posted by Charles Bazlinton

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