The marketing of banking and financial products in a state by a bank that has its headquarters outside the state’s territory. – In Germany, such cross-border service transactions are generally subject to supervision by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht), unless they involve banks that are controlled by a supervisory authority in the EU. Other financial service providers – especially from Switzerland and the U.S. – generally have to open a branch in Germany or establish a subsidiary and apply for a banking license for it under Section 32 of the German Banking Act; see also Section 53 of the German Banking Act. – Overall, it has been shown that a certain proportion of foreign banks in a currency area has a stabilizing effect on credit supply. In addition, foreign banks can also benefit the domestic industry through knowledge transfer or by setting an example with a better risk department. This can be seen, among other things, in the fact that large domestic banks in Germany shed jobs, but on balance these jobs only shifted to foreign banks based in Germany. – In Deutsche Bundesbank statistics, the term foreign banks includes institutions majority-owned – defined as holding more than fifty percent – by foreign banks (banks majority-owned by foreign banks) and branches of foreign banks (branches of foreign banks). – See foreclosure, agency, alliances, cross-border, foreign investment, foreign affiliates, foreign branch, banking supervision, European, guard money, Cassis de Dijon ruling, deposit insurance, European passport, credit institution, cross-border, lead economy, market entry costs, majority ownership, name identity, representative office, ring fencing, branch company, branch. – Cf. Annual Report 2007 of BaFin, p. 121 f. (table of all foreign banks registered in Germany at the end of 2007). Detailed statistics on the activities of German banks’ foreign branches (including building and loan associations as of 2000) can be found in the statistical section of the respective monthly report of the Deutsche Bundesbank, under the heading “Banken” (“Banks”). On the internationalization of banking business, see the Deutsche Bundesbank’s Monthly Report of January 2005, p. 29 ff, BaFin Annual Report 2004, pp. 114 ff. (banks from Switzerland and the U.S.), BaFin Annual Report 2006, p. 61 (overview), BaFin Annual Report 2008, p. 116 (breakdown of foreign banks at year-end 2008 and 2007), BaFin Annual Report 2009, p. 130 (new recording methodology and thus only limited comparability with previously published figures), p. 150 (unsatisfactory legal situation with regard to BaFin supervision of branches of foreign banks), p. 233 (institution abroad requires permission from BaFin if it conducts business without a local presence in Germany), BaFin Annual Report 2011, p. 151 (statistics on foreign banks as of ultimo 2011), pp. 167 f. (Supervision of Foreign Institutions), BaFin Annual Report 2012, p. 152 (Counterparty Risks of Foreign Banks Condense to Own Home State Due to Their Predominant Business Activity; Supervisory Colleges), as well as the respective BaFin Annual Report, chapter “Supervision of Banks, Financial Service Providers, and Payment Institutions,” section “Supervisory Action,” Deutsche Bundesbank Annual Report 2011, pp. 117 et seq. German institutions abroad; overview), Financial Stability Report 2012, p. 75 et seq. (foreign shadow banks turn out in part to be business units set up by German institutions abroad; risks). – A list of foreign banks operating in the euro area can also be found on the ECB’s website.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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