By WILLIAM TELFORD, Business Editor

BUSINESSES in Germany were less affected by the global banking crisis because the country’s network of savings banks works at a regional level, it has been claimed.

Andreas Koch, director of Sparkasse Leipzig, said having such as system supports regional business – because the bank can only operate in its geographical area.

“We are only allowed to do business in the region, we can’t go to another region,” he said. “Our success depends on the success of the region and the companies in that region.”

Germany has a three-tier banking system: private banks such as Deutsche Bank, co-operative banks, and the savings banks.

This third group consists of 431 independent, locally-managed savings banks, such as Sparkasse Leipzig, which concentrate on customers in the region they’re situated in.

In general, savings banks are not profit oriented, their shareholders being the cities in their locality, its savers being the local population.

Mr Koch said that during the global banking crisis German firms were therefore still able to access loans because “they could go to the regional banks”.

He said his bank has assets of nearly nine billion euros, and is ranked 16th in Germany’s hierarchy of regional banks.

He is proud of its work to support businesses in its region, Leipzig and Saxony. Its operations include financing start-ups, growing businesses and commercial real estate.

“We give businesses a lot of support, right from showing how to create a business plan,” he said.

“We are the first bank of every second person in the region, 50 per cent of them,” he added. “We are closely rooted in the region. We know its special circumstances and people and are part of every networking group.”  Mr Koch said the banks also, therefore, support their home city’s cultural growth, in addition to its businesses.

“Our profit stays in the region, it doesn’t go to hedge funds or shareholders,” he said.

“We can either leave it in the company, for it to grow more, or we can give it to the community.

“Our owners, the shareholders, are the cities, their councils, and they are doing a lot to sponsor social, cultural and sports in the region.”

This includes backing opera, museums and the arts. The bank actually owns 2,700 works of art, which are displayed, not sold.

“It reinforces the message you are only successful if the region is successful,” Mr Koch said.

He agreed with Invest Region Leipzig, the city’s economic development company, that the challenge for the city is to encourage more high-tech start-ups, where better qualified staff “earn more money and bring more money to the city”.

He said Leipzig has a greater hunger for success than already developed German cities, such as Munich, but added: “We need to promote this city in other regions and internationally.”

Professor Dr Andreas Pinkwart, dean of HHL, the Leipzig Graduate School of Management, agreed that the regional banks were key to Germany’s economic power.

“My personal view is the regional savings bank system is one of the strengths of German industry,” he said. “It’s a good partner, it’s given people new opportunities.

“And it’s not only in the beginning, when companies start, but all the way, you need a strong partner giving advice.”

He said a strong region needs a an organisation to anchor a network of institutions and private partners – and the bank fulfils this role.

“You need entrepreneurial people, money behind them, and a network to bring the region together,” he said.

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(Publicity generated by Dorcas Media)