In Germany, formerly the central institution of the savings banks under public law; called Girozentrale (giro center) in Bundesbank statistics until 1998. Reprimanded by the European Commission as distorting competition, the Landesbanken are currently undergoing a transformation process. Existing state guarantees – the so-called Gewährträgerhaftung – had to be dropped by mid-2005. Since then, developments have been in flux and their end is difficult to predict. It cannot be completely ruled out that Germany will sooner or later have only one institution (top land bank; Top-Landesbank). In the wake of the subprime crisis, SachsenLB was forced to merge with Landesbank Baden-Württemberg. – For many years, the state banks had financed projects at dumping prices on behalf of their respective state governments. Because the state would step in in an emergency, the creditworthiness of the Landesbanks was first-class, and the refinancing of the loans was correspondingly favorable. The executive and supervisory board positions were largely occupied by factionists. In many cases, these factionists dreamed of turning their institution into a global player instead of taking care of loans in their own state. – The transition from a privileged state bank to a normal institution, however, revealed the weaknesses in the structure of the Landesbanken. Wesdeutsche Landesbank and Landesbank Baden-Württemberg each posted losses of around 1 billion euros in 2007, while Bayrische Landesbank lost 1.9 billion euros. In all cases, the banks were restructured using taxpayers’ money. This prevented a fundamental reorganization of the often seemingly confused business activities of these institutions, including the reduction of sometimes considerable overcapacities. – See Arranging, Blind-Dove Connection, Money Burning, Business Model Analysis, Guarantor Liability, Gigabank, Market Shakeout, Banking, Coinsurance Effect, Risk Shielding Act, Central Institution, Verticalization, Westdeutsche Landesbank, Central Treasury. – Cf. BaFin Annual Report 2002, pp. 63 ff., BaFin Annual Report 2003, p. 23, pp. 91 ff, BaFin Annual Report 2004, p. 110 f. (restructuring measures), BaFin Annual Report 2005, p. 25 f. (description of the various strategies adopted by the Landesbanken to adapt to the new legal situation), BaFin Annual Report 2006, p. 19 f. (foreign business also moves forward again), BaFin Annual Report 2009, p. 135 ff. (restructuring of WestLB; conditions at HSH Nordbank threatening existence), BaFin Annual Report 2011, p. 159 (overall poor marks for the Landesbanken), BaFin Annual Report 2013, p. 101 (situation of the Landesbanken has improved slightly), and the respective BaFin Annual Report, chapter “Supervision of Banks, Financial Service Providers and Payment Institutions.”
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