Corporate Governance and Access to Finance - ESBG

It is one of the major characteristics of savings banks in Germany thattheir assets are strictly separated from those of their “Träger“. The savingsbanks are mission oriented. Despite the legal independence there is aclose link between the savings banks and their municipal “Träger“. It isthe “Träger” who decides on some fundamental questions like thefoundation, merger of savings banks and amendments of their statutes.The Träger, too, appoints the majority of the members of the Board ofAdministration (which has to a certain extent a similar function like theboard of directors in a stock company).The savings banks laws of the Länder define the “public mission“of thesavings banks and thus the reason and purpose for founding a municipalsavings bank. This in turn forms the basis for the engagement of thepublic sector in the area of financial services. It is a constitutionalobligation that public-law institutions or entities have to pursue a publicpurpose. For the savings banks under public law this purpose consists ofthe task of assuring to provide in their respective region financial servicestailored to the needs of the population, the small and medium sizedcompanies and the public sector without discriminating against anycustomer group. 34In many cases the respective savings banks laws of the Länder haveexplicit stipulations that the savings bank has an obligation to offercitizens of their region a current account (on credit balance only, nooverdraft facilities), to allow them a participation in the economic life.In this respect, too, the savings banks engage in social responsibility.Roughly 80 per cent of all persons receiving income support have theircurrent account at a savings bank.The operational activities of the Sparkasse focus on its region, for legalas well as for economic reasons (so-called regional principle) 35 .This concentration on the regional market leads to a limitation of risks.The fact that savings banks have to focus on their region has importantpositive economic consequences: the individual savings bank depends onits geographic region as the source for business and benefit potentials.34 Lohmiller, R.:”Sparkassen-Finanzgruppe: Rechtsgrundlagen der Sparkassen”, in:“Enzyklopädisches Lexikon des Geld-, Bank- und Börsenwesens“, 2007.35 See for instance Ayadi, Schmidt and Carbó (2009), chapter 5.115