The balance sheet structure by category of banks

For the commercial banks, Landesbanks and special purpose banks, unlike the other categories, interbank transactions account for a sizeable proportion of their operations. Together with the co-operative central institutions, they distribute and ensure the availability of liquidity on the German banking market.

Table: The balance sheet structure by category of banks

Because the savings banks, credit co-operatives, mortgage banks and building and loan associations carry out comparatively little interbank business, their lending to non-banks is of far greater importance in purely statistical terms than is the case in the other three categories.

Between 20 and 25% of the balance sheet total of the savings banks, credit co-operatives and mortgage banks is made up by securities holdings. This shows that these categories also do a considerable amount of business with other banks. The close relationship of the savings and co-operative banks to their respective central banking institutions plays an important role in this context. Two thirds of the domestic securities held by the savings banks – and as much as 70% of those held by the credit co-operatives – are bank bonds. In both cases, the vast majority of these bonds were issued by Landesbanks or co-operative central institutions.

Traditional deposit-taking operations with non-banks dominate on the refinancing side at savings banks, credit co-operatives and building and loan associations. Deposits of non-banks are an important source of funding for the commercial banks, too, though they make up a significantly lower percentage of their total assets.

Debt securities play an important role in the refinancing operations of the mortgage banks, the special purpose banks and – albeit to a much lesser degree – the Landesbanks. These are mainly collateralised debt securities, such as Pfandbriefe. Bearer debt securities are quite an important means of raising funds for the commercial banks as well. But this is principally due to the presence of HypoVereinsbank in this category, which, thanks to its “mixed bank” status, also has the right to issue Pfandbriefe. The commercial banks have issued far fewer debt securities in recent years, however, since this method of raising funds has become too expensive after repeated downgradings by the credit-rating agencies. The Landesbanks, whose ratings tend to be more favourable due to their public ownership, do not have this problem and make large-scale use of the capital market for funding purposes. This was particularly evident over the last two years ahead of the withdrawal of the state guarantees known as Anstaltslast and Gewährträgerhaftung on 19 July 2005.