Banks & Money

Money Matters in Germany and Europe

Germany has a vital banking tradition that dates back to the great Fugger money-lending empire in the 15th and 16th centuries, and before that, the limited banking practices required by the Hanseatic League (Hansa) of northern Germany in the 14th century. Germany’s first commercial bank was established in Hamburg in 1619. The Giro bank lasted until its takeover by the state-run Reichsbank in 1875.


The German Postbank, located in many post offices, offers full banking services including a Geldautomat (ATM). PHOTO © Hyde Flippo

World First currency transfers

By the early 1800s Frankfurt am Main was a banking center under the House of Rothschild. The Rothschilds, in fact, took their name from the red (roth) shield (Schild) on the front of their Frankfurt home during the first years of the Jewish family’s history. Their banking dynasty soon extended beyond Frankfurt to London, Naples, Paris, and Vienna. Between 1870 and 1872 several other important German banks evolved, some of which are still around in one form or another.

Also see Online Bank Accounts below.

The rankings of Germany’s largest German banks have changed dramatically in the last few years. Among other changes, Dresdner Bank merged with Commerzbank, and the Dresdner name disappeared in 2010. (See current rankings.) Frankfurt’s present-day skyline consists largely of the gleaming towers that serve as headquarters for Germany’s banks, a sight that has led to one of the German financial capital’s nicknames: “Bankfurt.” In 1994 Frankfurt won the heated contest to house the European Monetary Institute (EMI), the precursor to the current European Central Bank which began operations in Frankfurt in January 1999 with the introduction of the euro. Now more than ever, Germany can rightfully bill itself as Finanzplatz Deutschland – Germany, the Financial Center. Until the European Central Bank began operation in 1999, Germany’s Bundesbank, known as the Buba to the financially literate, was Europe’s most influential central bank. For all practical purposes, the Deutsche Bundesbank was to Europe what the Federal Reserve Bank is to the US. Even today, as Germany’s federal bank, the Bundesbank continues to wield considerable power over the economic machinations of Europe.

Sparkasse logo

The Sparkasse logo.

Germany currently has four commercial, retail “Großbanken” (major banks): Deutsche Bank, Commerzbank, HVB (HypoVereinsbank)* and the Postbank** (“postal bank”). These four stockholder-owned German-based banks together control over two-thirds of the country’s private banking market. In addition, Germany also has public, state-owned banks (öffentlich-rechtliche Kreditinstitute) such as LBBW, BayernLB, HSH Nordbank, LBB, Nord/LB and SaarLB, which are state “wholesale” banks that primarily work with other banks. Also publicly owned is the Sparkassen group, with city or state-owned retail savings-and-loan banks. The red Sparkasse logo (image on left) can be seen all across Germany. Then there are the German communal banks (Genossenschaftsbanken) such as the Volksbank or Raiffeisenbank chains. These are similar in make-up and function to US credit unions.

Top Ten German Banks
Ranked by total assets (2011), with headquarters city, assets in euros:

  1. Deutsche Bank** (Frankfurt a.M., 2.16 billion)
  2. Commerzbank (Frankfurt a.M., 661 million)
  3. Kfw Bankgruppe (Frankfurt a.M., 495 million)
  4. DZ Bank (Frankfurt a.M., 406 million)
  5. UniCredit Bank AG* (Munich, 386 million)
  6. Landesbank Baden-Württemberg (Stuttgart, 373 million)
  7. BayernLB (Munich, 309 million)
  8. Nord/LB (Hanover, 227 million)
  9. Hypothekenbank Frankfurt (Eschborn, 203 million)
  10. Deutsche Postbank** (Bonn, 192 million)

For a full list of the Top Banks in Germany see this page.
*The HypoVereinsbank is a subsidiary of UniCredit Bank AG, based in Munich.
**Bonn-based Deutsche Postbank AG is a subsidiary of Deutsche Bank.

N26 online banking

Online Banking – “Fintech”
A relatively new option for banking in Germany and Europe is online banking with so-called “fintech” banks that often have no physical bank branches. By avoiding brick-and-mortar banks, they can save money and pass the savings on to their customers. To do fintech banking, all you need is a smartphone and an app. (A computer or tablet will also work.)

Depending on the kind of account you want, it is possible to get a free online banking account or one that is much cheaper than a typical German or European bank account. Online banks serving Germany include DKB Cash, 1822direkt, N26, O2 Banking, Santander, netbank, and a few others. Each has its own advantages and disadvantages. For instance, N26 is the only one with English-language support and a cool app, but it does not offer an EC debit card with its free account. (The N26 Black account does offer that and more for a low fee.) Comdirect is the only one so far that has no German or Austrian residence requirement. You can apply for an account even if you don’t live in Germany. Which online bank you choose will depend on your own requirements. See How to Open a Bank Account in Germany for more.

Switzerland and banking are, of course, synonymous terms, with Zurich being the Swiss (and a world) financial center. Switzerland has nearly 600 banking institutions with many more branches and more than 1,100 savings banks (Sparkassen). The two biggest Swiss banks are UBS and Credit Suisse. In Austria the Creditanstalt bank and Bank Austria in the banking center of Vienna were once the country’s leading financial institutions. The two Austrian banks merged in 1997 and joined Germany’s HypoVereinsbank in 2000. Today Austria has four large private banks: Raiffeisen Bank International, Bank Austria, Erste Bank and BAWAG P.S.K.

Although Germany continues to be one of Europe’s most influential financial centers, in recent years the banking sector has undergone much turmoil and many changes. First came the impact of German reunification in 1990, particularly in the eastern part of the country. Then came the big mortgage and banking crisis of 2007, with its resulting bankruptcies, mergers and blendings of banking types that have changed the German banking landscape dramatically. The euro’s problems have also been the banks’ problems. Even years after the initial crisis in 2007, German and European banks are still dealing with the euro crisis.

More on The German Way
The Euro
All about the euro, the Euro Zone and the euro crisis

When you enter a German, Austrian, or Swiss bank, it looks pretty much like a bank in America, but there are a few differences—only some of which have to do with the language. Geldwechsel (money exchange), Girokonto/Sparkonto (checking/savings account), and Kasse (cashier’s window, teller) are the most important words to know. Many German banks, in characteristic German compartmentalization, only allow you to do certain things at certain windows. So watch for those signs.

There is, however, a newer tendency for banks to be less specialized by window, and to offer a variety of services, American style, at most teller windows. Many banks in Germany now have almost fully automated banks – with a bank of ATMs and a few “service counters” where customers can speak with a real person. In some cases there are no teller windows at all, and you can only withdraw cash from an ATM (Geldautomat). The traditional “glass cage,” with a thick bullet-proof window, is now found at only a few main branches of a bank. Although German banks usually have an open, relaxed interior decor, the glass cage is a reminder that Germany too has bank robbers.

Walk by any small-town bank in the most remote corner of Europe, and you will see the latest exchange rates for a multitude of national currencies on display (usually with colorful national flag symbols). With the euro, there are fewer foreign currencies than there used to be, but you can exchange your dollars, pounds or other curreny for euros at almost any full-service bank in Germany. You will also usually get the most favorable exchange rate at a bank, compared to a hotel, shop or money exchange. Of course today most tourists do their “foreign exchange” transactions at an ATM with a credit card.

Germans have a checking account system that Americans find a little confusing. In the US the personal checking account is used for paying bills, buying goods and services, and checks are made payable to an individual or a company name. Unlike Americans (and the French), Germans don’t use personal checks. They do things differently, using a Geldüberweisung or money transfer made out to an account number and the name of the account holder. To pay for a magazine subscription, for example, you make out a transfer check (Überweisung) payable not to the magazine but to a BLZ and Girokonto number. A BLZ is a Bankleitzahl or bank code number, similar to the bank numbers you see on US bank checks. A Girokonto (ZHEE-ro KON-toh) is a specific transfer account for a firm, organization, or person. (The number of the magazine’s account would be printed on the order form for the magazine.) The Überweisung authorizes the bank to transfer a sum of money from your account to the magazine’s account (like a check), but you have to do it by the numbers, and instead of sending a check to the magazine, you send (or take) the Überweisung to your bank. Today an electronic Geldüberweisung (EFT) via online banking is much more common.

As of February 2016, all German bank account numbers conformed with the IBAN system required in all countries using the euro. German accounts still use the standard German BLZ system for domestic transactions, but BIC/SWIFT internationally.

Avoid Trying to Cash a US Personal Check in Germany
Even though written personal checks are becoming increasingly rare in the US, if you want to cash one at a German bank, it can be almost impossible. The German banking system is simply not geared to deal with a check drawn on a US bank. Even if you have a German friend with a German bank account, it can be a very complicated process. Even a certified bank draft or cashier’s check can be problematic. More…

The EC bank card (Maestro) is accepted all over Europe by stores, businesses, hotels and restaurants. The EC card works like a US debit card. It is not a credit card. In order to get one, you have to have an account with a German or European bank. The bank can also provide automatic payment or electronic transfers for monthly or other regular billings. Almost any banking service you would expect in the US, plus some not offered in the US, is available from a European bank. If you have a computer, tablet or smartphone with Internet access, home banking is also available in Germany.

Online Banking in Germany: What’s a TAN?
Online banking in Germany has an additional safeguard that US banks have yet to introduce. In addition to your password and ID, to conduct an online bank transaction with a German bank you need a special six-digit code number known as a TAN (“transaction number”). The TAN used to be in a printed list the bank provided. Nowadays a TAN is generated automatically by a small electronic TAN generator that reads the computer screen! You can also get a TAN via your mobile phone if you are in Germany. Each TAN is only valid for a limited time for each transaction. No TAN, no transaction!

Sending Money to or from Germany
As we explained above, it’s not a good idea to simply write a US check and send it to someone in Germany. To learn more about the best options for transferring funds, see International Money Transfers to and from Germany.

More | International Money Transfers

Next | Top German Banks

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