German public banking sector

Throughout the 19th century, governments of individual states or provinces of Prussia established (respectively) Landesbanken and Provinzialbanken to lend to various kinds of borrowers, including Sparkassen but not limited to them.

[2] The beginning of the 20th century saw the emergence of a number of Girozentralen acting as centralizing entities for their region's Sparkassen, a trend that was greatly accelerated by government policy choices during World War I even though it had started slightly earlier;[3]: 209  numerous episodes of consolidation followed, leading to the current Landesbank landscape.

[5]: 6  That feature set Germany apart from other European countries in which, aside from the Soviet Union of course, the bulk of the banking sector was in private-sector hands.

KfW was established in 1948 and a few regional promotional banks in the early 1950s, but in most German states they were created (in Eastern Germany) or spun off from the local Landesbank (in the West) in the 1990s and 2000s.

The German public banking sector has witnessed numerous episodes of distress, in part because of its inherently politicized governance.