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Country Commercial Guides FY 2000: Germany Report prepared by U.S. Embassy Bonn, released July 1999 Note*

CHAPTER VIII. TRADE AND PROJECT FINANCING

Germany has a basically non-discriminatory, well developed financial services infrastructure. Germany's universal banking system allows the country's more than 45,000 bank offices not only to take deposits and make loans to customers, but also to trade in securities. The traditional German system of cross-share holding among banks and industry, as well as an undeveloped equity market and a high rate of bank borrowing dictate that German banks exert substantial influence on industry. There is current discussion on whether or not the banks' influence should be diminished, but given the overall conservative nature of the financial system and its successes in the past it is unlikely that profound changes will result. Private banks control roughly 30 percent of the market, while publicly-owned savings banks controlled by state and local governments account for 50 percent of banking turnover, and cooperative banks make up the balance. All three types of banks offer essentially the same, full range of services to their customers. An array of specialist banks finance homeowner mortgages, provide guarantees to small and medium-sized businesses, finance projects in disadvantaged regions in Germany and guarantee exports to developing countries.

Practices regarding finance, availability of capital and schedules of payment are comparable to those which prevail in the United States. There are no restrictions or barriers on the movement of capital, foreign exchange earnings or dividends. Virtually all major U.S. banks are represented in the German market, principally but not exclusively in the city of Frankfurt am Main, Germany's main financial center. A large number of German banks, including some of the partially state-owned regional banks, similarly maintain subsidiaries, branches and/or representative offices in the United States. Germany's "big three" private banks are Deutsche Bank, Dresdner Bank and Commerzbank.