Banking Business in Germany

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Banking Business in Germany” presents the legal and economic frameworks for the banking sector in Germany.
Internationally, Frankfurt is often seen as a synonym for Germany. Flying into Frankfurt, one of the major airport hubs of the world, you get an impressive view over the skyline of its banking towers. Indeed, its location on the Main River has led many locals to refer to Frankfurt as “Mainhattan”. The financial centre of Frankfurt, too, is of great international importance, serving as a flagship for both Hessen and Germany.
Some 182 credit institutions, of which more than three quarters are foreign institutions, have chosen the financial centre of Frankfurt as their base.
Despite the financial crisis and the consolidation in its wake, the still high number of foreign banks (160 banks in 2015) demonstrates continued interest in being represented in this financial centre, in the benefit of being in close proximity to other key players and that Frankfurt has earned an excellent worldwide reputation.
With the European Central Bank and the Bundesbank located here, Frankfurt is a leading location for international monetary and currency policy. And since the Single Supervisory Mechanism (SSM) has been placed under the auspices of the European Central Bank in November 2014, the financial centre of Frankfurt as a whole has become even more valuable and attractive for foreign institutions. And so, together with the European Insurance and Occupational Pensions Authority (EIOPA) and the European Systemic Risk Board (ESRB), Frankfurt is not only the centre of European monetary policy, but has also become a centre for regulatory authorities and supervisory agencies that can boast a competitive regulatory environment.
Over the last few years, the main objective of regulatory efforts at international, European and national level has been the rebuilding of trust in the financial markets. The creation of a Capital Markets Union and the implementation of new European requirements for financial market products are just two of the changes we will have to adapt to. I believe that Frankfurt should contribute
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towards achieving a change of direction: after years with a focus on regulation, it is now time for the simplification and optimisation of framework conditions. If these challenges can be actively addressed, I am confident that Frankfurt will be able to successfully defend its market position among the competition provided by global financial centres.
The government of the federal state of Hessen is also playing its part by taking a clear position and supporting the current legislative process for financial regulation both at EU and national level. For the state government of Hessen, this includes the promotion of an evaluation and, if necessary, a modification of the existing regulation, not only at domestic level but also at European level. Moreover – and this holds especially true with regard to the debate surrounding the Capital Markets Union – regulatory differences must not lead to advantages or disadvantages for particular forms of financing.
In addition, the state government of Hessen considers it essential for financial market players to engage in an intensive exchange with one another. For this reason it is an active member of Frankfurt Main Finance, an initiative focusing on the marketing, interconnection and the future of the financial centre of Frankfurt, which forges a close relationship between political and commercial representatives among its members.
Growing internationalisation and the policy changes as a result of the financial crisis are increasing the pressure for innovation on financial institutions. Product life cycles are getting shorter and financial products are becoming increasingly complex, requiring professionals in the banking sector to be highly skilled. At the same time, credit institutions, too, will have to adapt their training programmes to meet the growing needs of their staff. This is being addressed by the Frankfurt School of Finance & Management and the House of Finance (Goethe University Frankfurt), among others. In particular the House of Finance – an excellent example of an effective public-private partnership – offers a specific focus in the field of financial industry research in Frankfurt which is unique in Europe. By pooling their expertise, researchers and financial institutions can achieve high levels of synergy.
The financial centre of Frankfurt can also pride itself on a professionally run tax administration. It is a reliable partner for taxpayers, and this is highly appreciated by foreign institutions. In order to ensure that this remains the case in future, the state government of Hessen will always strive to maintain its high quality standards in the training programmes within the Hessian tax administration.
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We welcome all financial institutions coming to Germany and contributing to this financial market, thereby enabling customers to choose from a diverse range of financial products.
I hope you will enjoy reading this publication and I cordially welcome you to Germany.
Dr Thomas Schäfer
Minister of Finance of the State of Hessen