Group bank

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Group banks ( English group banks , trust banks ) are specialized banks operating within a non-bank - Group the financial management (such as cash management , payment transactions or other financial services ) for Group-bound and / or for non-Group customers perform.

species

There are so-called “in-house banks” with purely group-internal banking tasks and “open group banks” that also conduct banking transactions with customers outside the group . Both are organizationally and operationally comparable to a regular commercial bank . Pure "in-house banks" provide the group members with current accounts for the processing of the group-internal money transactions and manage, manage and dispose of these accounts centrally. Money transfers that leave the group or reach it from outside are also handled by these "in-house banks". The “ Payment Factory ” processes these external payment transactions on behalf of the group members.

tasks

The group bank manages and monitors checking accounts for the individual group members, on which the payments between the group companies take place. It provides the liquidity , especially for the wage and salary payment dates. It acts as a cash pooling manager and thereby coordinates the cash flows within the group. The group bank also takes on netting within the group and offsets open foreign currency positions between the group companies. It can also take over the issue of securities for members of the group and / or their listing on the stock exchange . In addition to the group-internal banking services, “open group banks” usually take on the task of sales promotion and carry out the sales financing for the products or services manufactured in the group .

history

Initially, the corporations delegated their financing tasks to finance departments to which banking departments belonged. These worked together with external banks. The corporations eventually reached a financial size that justified the establishment of a corporate bank. The Röchling Brothers Bank acted as the first group bank from 1855 , followed in May 1884 by the "Bank Elektrischerwerte" for AEG . This was followed by "Berg- und Metallbank AG", which was founded on September 4, 1906 as the group bank of the Metallgesellschaft , but which only 48% belonged to the Metallgesellschaft. She centrally carried out stock exchange, financial and mining transactions for the group.

The heyday of these corporate banks was after the First World War , which brought about a power shift between industrial and banking. The Reichs-Kredit-Gesellschaft was established in June 1919 and initially had the task of liquidating war societies for the Reich Treasury . It later acted as the group bank for the empire-owned companies. The Westfalen Bank was founded in 1921 by several industrial companies of the Ruhr area founded to a dependency on Berlin's major banks to avoid. In 1923, the Deutsche Verkehrs-Kreditbank took over the bank function for the Reichsbahn , while the " Deutsche Länderbank AG ", founded in 1909 as the "Deutsche Kolonialbank", represented the financial interests of IG Farben from 1922 . The “Niederdeutsche Konzernbank”, which began in August 1923 and was liquidated in January 1925, led a short life. Its sole purpose was the affiliation of companies from the stone and earth , construction and chemical industries to the “Dr. Schaefer Group ".

A total of 85 branch and house banks were established in Germany between the two world wars, because the industrial desire for bank-independent financing grew , particularly due to the decline in bank liquidity during the period of inflation . A dissertation was devoted to the corporate banks in 1931. It explained the establishment of corporate banks with the "necessity of an appropriate bank-based utilization of corporate funds, not least as a result of self-financing in the sense of the strongly growing corporate funds". The introduction of the KWG in December 1934 brought the requirement for banking licenses and banking supervision and restricted the management of group banks by non-banks. After the war, the newly strengthened big banks presented themselves as pillars of the industry, so that the need for group-owned banks hardly revived at first. One of the few exceptions was the founding of Grundig Bank for Grundig AG in 1958.

Degussa Bank , which was established in January 1873, was also a real group bank , but was acquired by MMWarburg & CO in January 2007 and therefore lost its status as a pure group bank . The "Hugo Stinnes-Bank" caused an international sensation when it had to stop its payments in October 1963, whereby a trade magazine dubbed it not as a bank but as a "speculative trading company". It was just a "financial department of an industrial and trading company equipped with a banking license", Hugo Stinnes GmbH . Their main mistake was the refinancing of long-term loans with short-term US dollars - time deposits in interbank trading . The Hanseatic Bank has been the Otto-Versand group bank for the entire partial payment business since 1969 , hence an "open group bank ".

Legal issues

If a group bank conducts banking business exclusively with its parent company or with its subsidiaries and sister companies , it does not count as a credit institution according to Section 2 (1) No. 7 KWG (“group privilege”). The main application of this rule is cash pooling . The group privilege can be combined with the administration of a system of employee participation in accordance with section 2 (6) sentence 1 no. 6 KWG. In addition, companies apply to financial services as defined in § 1 sentence 2 KWG. 1a exclusively within the group of companies provide, according to § 2 para. 6 no. 5 KWG as financial services institutions . In addition, the group privilege applies to a financial investment between a municipality and its own and associated companies and their (legally independent) own companies . A banking license in accordance with Section 32 (1) KWG to conduct banking business is not required in these cases. According to Section 39 KWG, these group banks are not allowed to use the designation “Bank” or “Volksbank”, according to Section 40 KWG, not the designation “Sparkasse” in their company names, as these terms are protected under the aforementioned provisions and reserved for credit institutions.

However, a banking license is required as soon as a group bank accepts funds from “the public” (outside the group) (Section 1 (1) No. 1 KWG). If it takes on the task of sales financing for the group outside the group ( lending business within the meaning of Section 1 (1) No. 2 KWG), it is considered a credit institution and requires a banking license. Then it is subject to the KWG, other banking regulations and banking supervision. In particular, group banks with a banking license must observe the multi- million dollar , large loan and corporate loan regulations .

Banking aspects

When non-banking corporations reach a size that results in voluminous financial transactions , the question of establishing their own bank may arise. This group bank acts in the interests of the group because it is bound by group law, so that the group does not have to rely on other, independently operating banks. It saves the group transaction costs because it only calculates the bank costs that actually arise. Due to the positioning within the group, banks and third parties outside the group do not have any insight into internal financial transactions. The transparency of group banks is limited to the consolidated financial statements .

Group banks can be compared with specialist banks in terms of banking operations. The cyclical susceptibility of group banks is quite high due to a lack of risk distribution. With the same size of company, a group bank usually has a higher risk than universal banks , because the latter are better able to process economic risks thanks to their broader range of products and customers. The one-sided concentration of the group banks on certain banking transactions and / or customers lacks the necessary diversification and spread of risks; there is usually a lack of granularity with a simultaneous risk of cluster risks . This applies in particular to the existing loan portfolio . Group banks may not be able to react to market changes, especially if their business purpose is restricted by law.

Within the banking statistics, the Deutsche Bundesbank aggregates the group banks into "regional banks and other credit banks".

Purpose and use

The development of finance departments into profit-oriented corporate banks emancipated from the basic industrial business can be explained with economies of scope and the agency problem . Central finance management reduces the exchange rate risk in the group , pools the liquidity reserves and reduces the currency volume. External banks are only used by the group bank for peaks that are not balanced within the group (domestic currency / foreign currency). Group banks operate disintermediation by substituting traditional banks and making the group largely self-sufficient from other banks.

International

In the USA, group banks are known as " group banks ". In 1929 the Comptroller of the Currency John W. Pole defined corporate banks as a significant step in the banking system, with each corporate group being centralized by a bank in the form of a holding company . In this system, a bank and a non-bank can be the subsidiary of the same holding company. “ Group banking ” or “ holding company banking ” is a system in which a holding company controls two or more banks. Their number was nationwide by 1955 at 434 out of a total of 14,025 commercial banks and ranged from one in Michigan to 86 in Minnesota . In Japan "trust banks" ( Shintaku Ginkō ) have to separate their bookkeeping strictly according to bank accounts and group accounts due to the corporate law from 1922 .

Others

The term group bank is sometimes used misleadingly for smaller credit institutions that belong to a large bank group. The term industry banks is also sometimes used as a synonym, although this is understood to mean credit institutions that only work for customers belonging to a specific industry ( Landwirtschaftliche Rentenbank , Bank für Sozialwirtschaft , Deutsche Apotheker- und Ärztebank or Pax-Bank ).

Individual evidence

  1. ↑ Klaus Fleischer: Renaissance of the corporate banks , in: Stefanie Burgmaier / Stefanie Hüthig, (ed.), Bankmagazin , No. 11, 2010, p. 34 f.
  2. ↑ a b Péter Horváth / Uwe Michel / Ronald Gleich, Finance Controlling: Strategic and Operational Control of Liquidity , 2011, p. 129.
  3. ^ Gerhard Müller, Bank-Lexikon: Concise dictionary for banking and savings banks , 1953, Sp. 488.
  4. ↑ Christoph Denk / Birgit Feldbauer-Durstmüller, International Accounting and International Controlling , 2012, p. 531.
  5. ↑ Klaus Altmeyer, Das Saarland: A contribution to the development of the youngest federal state in politics, culture and economy , 1958, p. 679
  6. ↑ Stefanie Knetsch, The Group's own banking institute of the Metallgesellschaft in the period from 1906 to 1928 , 1998, p. 53.
  7. ^ André Jacob, Corporate Banking: Self-creation of financial services by non-banking companies , 1996, p. 104.
  8. ^ A b Karl Theisinger, Die Bank: Textbook and reference work of banking and savings banks , 1952, p. 274 ff.
  9. ^ Gerhard Müller, Bank-Lexikon: Concise dictionary for the banking and savings bank system , 1953, Sp. 644
  10. ↑ Walther Adolf Roth, Chemiker-Zeitung , Volume 47 / Part 2, 1923, p. 654.
  11. ^ André Jacob, Corporate Banking: Self-creation of financial services by non-bank companies , 1996, p. 106
  12. ↑ Bruno Fischer, Die Group Banks of German Corporations , 1931, p. 84
  13. ^ Journal for the entire credit system, Volume 16, 1963, p. 1085
  14. ^ Heinrich Rittershausen / Hans Büschgen , Money, Capital and Credit: Festschrift for the 70th birthday of Heinrich Rittershausen , 1968, p. 194
  15. ↑ According to Section 1 (7) KWG, sister companies are companies that have a joint parent company. It does not depend on the legal form and the seat .
  16. ↑ Herbert Zerwas / Mathias Hanten, ZBB 2000, p. 276.
  17. ↑ BaFin information sheet of August 16, 2011, information on the area exemption of the so-called group privilege
  18. ↑ BaFin, letter of March 7, 2002 - VII 6-71.30 (5976)
  19. ↑ George J. Benston: Universal Banking . In: Journal of Economic Perspectives . tape 8 , no. 3 , 1994, p. 121-143 , doi : 10.1257 / jep.8.3.121 ( PDF ).
  20. ↑ Svetlozar R. Nikolov, The role of banks in the financial system , 2000, p. 55
  21. ↑ Eugen Löffler, The Group as a Financial Intermediary , 1991, p. 6.
  22. ↑ KC Shekhar, Banking Theory And Practice , 2009, p. 19.
  23. ^ Clifford Gomez, Financial Markets, Institutions, and Financial Services , 2010, p. 202
  24. ↑ Palmer Tobias Hogenson, The economics of group banking , 1955, p. 24 ff.