Savings bank
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A savings bank is a financial institution that is not run on a profit-maximizing basis, and whose original or primary purpose is collecting deposits on savings accounts that are invested on a low-risk basis and receive interest. Savings banks have mostly existed as a separate category in Europe.
Savings banks originated in late-18th Europe as a development of the Enlightenment, and became a Europe-wide phenomenon in the first half of the 19th century.[1] The trajectories of savings bank systems then diverged across European nations, variously leading to the formation of integrated banking groups, cohesive national networks, conversion into cooperative banking or commercial banking entities, and/or piecemeal consolidation with other credit institutions. In most countries, the surviving savings banks have private-sector status and no longer operate under a distinctive legislative framework; significant exceptions include Germany and Luxembourg, where savings banks are public-sector entities.
Naming
In many European languages, savings banks are referred to by a word that differentiates them from banks (French: caisse, German: Kasse, Italian: cassa, Russian: касса, Spanish: caja) and denotes their more restricted scope of activity, sometimes translated as "fund". That word has no direct equivalent in English; its etymology is identical with that of cash and it originally referred to a cash box, then a cash register.
Overview
The origin of savings banks lies in liberal and philanthropic aspirations that motivated their promoters to create non-profit establishments aimed at promoting a culture of thrift and financial prudence among the lower classes, and using savings and the logic of compound interest as an incentive to think beyond short-term living horizons. In France, savings banks projects started to emerge in the 1750s and multiplied during the French Revolution but with no lasting success. Liberal luminaries including Adam Smith, Thomas Robert Malthus and Jean-Baptiste Say took interest in the economic and social role of savings.[1]
The oldest lasting savings bank is widely recognized to have been the Ersparungsclasse der Allgemeinen Versorgungsanstalt established in
France claims the credit of being the mother of savings banks, basing this claim on a savings bank said to have been established in 1765 in the town of Brumath, but it is of record that the savings bank idea was suggested in England as early as 1697. There was a savings bank in Hamburg, Germany, in 1778 and in Berne, Switzerland, in 1787. The first English savings bank was established in 1799, and postal savings banks were started in England in 1861.
The original function of savings banks to service consumers was limited to savings, not borrowing, a foundational difference with cooperative banking which started developing a bit later during the 19th century. Savings banks were typically heavily regulated and supervised by local or national governments, and restricted to invest only in government debt or other instruments deemed of low financial risk. Over time, however, these distinctions have tended to erode, and over the 20th century the regulatory framework and business model of savings banks has largely converged with those of commercial banks, albeit with significant variations across jurisdictions.
Starting in 1861 with the establishment of the British
After a long period of relative stability, including through two world wars and the European banking crisis of 1931 during which they were comparatively less affected than commercial banks, the savings banks came under increasing competitive pressure during the interest rate turmoil of the 1970s and underwent significant transformation and restructuring in many jurisdictions during the last quarter of the 20th century. By the early 21st century, savings banks were most significant in Germany and Spain, and to a lesser extent in Austria.[3]: 164
In
By country
By chronological order of inception (not including postal savings systems):
- Deutsche Girozentrale (est. 1918). The German savings banks sector is currently operating as a group with some centralized functions but decentralized organization, the Sparkassen-Finanzgruppe which relies on a group-wide institutional protection scheme.
- Switzerland: an early savings bank (German: Dienstenkasse) was established in Bern in 1787.[4]: 60 The oldest one still extant is Sparkasse Schwyz (est. 1812). As of 2022, there were 59 Swiss regional and savings banks forming a decentralized network.
- Edinburgh Bank for Savings (est. 1814). In the 1970s and 1980s, surviving British savings banks consolidated into the Trustee Savings Bank, which merged with Lloyds Bank in 1995, was again spun off as TSB Bank in 2013, and was acquired by Spain's Banco Sabadellin 2015.
- Hafnia Insurance, Sydbank and Sparekassen Bikuben, the latter a major savings bank that was eventually merged into Danske Bank in 2000. The other major savings bank, Sparekassen SDS , merged in 1990 into what in 2000 became Nordea. The remaining savings banks in 1993 joined other smaller Danish commercial and cooperative banks to form a single association of Local Banks, Savings Banks and Cooperative Banks in Denmark, or Lokale Pengeinstitutter .[5]
- Irish Life and Permanent and rebranded Permanent TSB.
- Federal savings banks are savings banks chartered at the federal level.[citation needed]
- Netherlands: the first Dutch savings bank (Dutch: Spaarbank)) was established in 1817 in Workum; 1848 saw the creation of the Amsterdam Municipal Savings Bank . In 1907, the savings banks started to operate as a national network (Dutch: Spaarbankbond). In 1979-1983 the largest Dutch savings banks merged to form VSB Group which in the 1990s became a founding component of Fortis Group, itself dismantled in 2008 with the Dutch operations absorbed into ABN AMRO. Other savings banks merged into SNS Bank (for Dutch: Samenwerkende Nederlandse Spaarbanken, lit. 'Dutch savings banks working together'), later nationalized and renamed De Volksbank in 2017.
- Caisse d'Épargne de Paris (est. 1818), non-profit private-sector savings banks were created in numerous French towns and cities, and started developing a national organization of their own in the 1980s and 1990s. By legislation of 1999, the Groupe Caisse d'Épargne was converted into a cooperative banking group, which in 2009 merged with another cooperative group, Groupe Banque Populaire, to form Groupe BPCE.
- Erste Group Bankas its central entity.
- Slovenia: the Kranjska hranilnica (German: Krainische Sparkasse, lit. 'Carniola Savings Bank') was established in 1820 and remained for some time the only financial institution in what is now Slovenia.[8] The Ljubljana Municipal Savings Bank was established in 1889.
- Sweden: the first Swedish savings bank was established in 1820 in Gothenburg. During the Sweden financial crisis 1990–1994, a number of them merged in 1992 to form a commercial banking group that has been branded Swedbank since 2006. Dozens of other savings banks survive, such as Westra Wermlands Sparbank in Värmland County (est. 1856).
- .
- Norway: the savings banks in Norway started with the establishment of that of Christiania in 1822. Still run decentrally, they have coalesced into two national networks, SpareBank 1 (est. 1996) and Eika Gruppen (est. 1997). All savings banks are members of the Norwegian Savings Banks Association.
- Finland: Turun Säästöpankki (lit. 'Turku Savings Bank') was established in 1822 in Turku. The number of Finnish savings banks reached more than four hundred in the mid-20th century, but has decreased since then to only 16. Of these, 15 participate in the decentralized Savings Bank Group (Finnish: Säästöpankkiryhmä , est. 2014) while the Oma Säästöpankki (based in Seinäjoki) is run independently.
- Czech Republic: the Česká spořitelna (German: Böhmische Sparkasse) was established in 1825 under the savings bank framework of the Austrian Empire. The savings banks in Czechoslovakia were consolidated in 1967 into a single State Savings Bank, then split in 1969 into a Czech and a Slovak components. In the post-Communist transition, Česká spořitelna was privatized and purchased in 2000 by Erste Group.
- Spain: the cajas de ahorros developed from 1835 legislation that emulated the French template. The 2008–2014 Spanish financial crisis triggered massive restructuring and consolidation, by which many savings banks were liquidated, purchased by commercial banks, or consolidated into four savings banks groups: CaixaBank, IberCaja, Kutxabank, and Unicaja.
- Hungary: the First National Savings Bank of Pest established in 1839-1840, was converted in 1844 into a joint-stock company. From then, Hungarian entities named "savings bank" were essentially indistinguishable from commercial banks. In 1949, the Communist authorities established the National Savings Bank (Hungarian: Országos Takarék Pénztár), later known as OTP Bank.
- Russia: in 1842, the Imperial government established savings banks in Saint Petersburg and Moscow. Like all Russian banks, savings banks disappeared under war communism in the first few years of the Russian Revolution. They were re-established in 1922-1923 as sberkassas (Russian: сберегательная касса). In 1991, the Russian network of sberkassas was reorganized as Sberbank.
- Slovakia: the Pressburger Spar-Casse was established in 1842 in today's Bratislava, followed by other savings bank foundations in what is now Slovakia throughout the 1840s. Today's Slovenská sporiteľňa, like its Czech equivalent, results from the 1969 division of the State Savings Bank of Czechoslovakia. It was also purchased by Erste Group in 2001.
- Croatia: as in Hungary (with which Croatia was tied politically until World War I), "savings banks" were largely undistinguishable from commercial banks until the general destruction of the Croatian banking sector following World War II. These included the First Croatian Savings Bank (est. 1846) and City Savings Bank of Zagreb (est. 1913).
- Caisse Générale d'Épargne et de Retraite was created in two stages in 1850 and 1865 as a national savings institution. In the 1990s it was privatized and became part of Fortis Group, since 2008 itself part of BNP Paribas.
- New Zealand: The first trustee savings bank was the New Plymouth Savings Bank (est. 1850), later branded TSB. Savings banks as a legal category disappeared in 1987, being replaced with so-called registered banks.[9]
- Luxembourg: the Caisse d'Épargne de l'État, also known as Spuerkeess, was established in 1856.
- Chile: the Caja de Ahorros de Empleados Públicos de Chile was established in 1858 for the specific benefit of government employees.
- Brazil: the Caixa Economica e Monte de Socorro (Portuguese: Savings Bank and Mount of Piety) was established in 1861, and merged with other public institutions in 1967 to form Caixa Econômica Federal.
- Japan: the Tokyo Savings Bank was established in 1880. The first national savings banks legislation was enacted in 1893, and by 1906 there were 486 savings banks in the country. Despite their inspiration by foreign models, Japanese savings banks had a more commercial or even speculative orientation, which led to widespread financial fragility among them. In 1921-1922, a long-delayed regulatory tightening led to all savings banks closing or merging into ordinary banks between then and the late 1940s, after which savings banks ceased to exist in Japan as a separate category. Several of the last remaining savings banks merged in May 1945 to form Japan Savings Bank Inc. (Japanese: 株式会社日本貯蓄銀行), which in 1948 renamed itself Kyowa Bank and eventually became part of Resona Holdings as the result of successive mergers and restructurings from 1991 to 2003.
- Portugal: the Caixa Económica Portuguesa (lit. 'Portuguese Savings Bank') was established as a nationwide entity in 1880, and merged in 1885 with Caixa Geral de Depósitos.
- Romania: the Casa de Depuneri și Consemnațiuni (est. 1864) was renamed Casa de Depuneri, Consemnațiuni și Economie (lit. 'Deposits, Consignments and Savings Bank') in 1880 and in 1881 established a subsidiary named the Savings Bank (Romanian: Casa de Economie). It has remained state-owned and been branded CEC Bank since 2008.
- San Marino: the Cassa di Risparmio della Repubblica di San Marino was established in 1882.
- Panama: the Caja de Ahorro en Panamá was established in 1934 as a national public bank.
- Poland: the General Savings Bank (Polish: Powszechna Kasa Oszczędności) was established in 1950 on the basis of the former postal saving system, since then known as PKO Bank Polski.
- Peru: the Cajas Municipales de Ahorro y Crédito (lit. 'municipal savings and credit banks') are microfinance institutions that have developed as municipally-owned public enterprises since 1982.[10]: 11
- Bulgaria: the State Savings Bank (Bulgarian: Държавна спестовна каса / DSK, est. 1951) has become DSK Bank, eventually purchased by Hungary's OTP Bank in 2003.
- Ukraine: the State Specialized Commercial Savings Bank of Ukraine was established in 1991 from the former Savings Bank of the USSR , and converted in 1999 into a state-owned joint-stock bank, the State Savings Bank of Ukraine (Ukrainian: Державний ощадний банк України), also known as Oschadbank.
- Savings Bank of Albania (Albanian: Banka e Kursimeve e Shqipërisë) was established in 1992 and purchased in 2004 by Raiffeisen Bank International.[11]
- Botswana: the Botswana Savings Bank was established in 1992 as a national public development bank.
- Sudan: the Savings and Social Development Bank , a microfinance institution, was established in 1995 in Khartoum.
- North Macedonia: savings banks, such as Opportunities Savings Bank (est. 1996) and Fulm Savings Banks (est. 1999), are licensed microfinance institutions.
Representation
The
See also
References
- ^ a b Carole Christen-Lécuyer (2004), "Histoire des Caisses d'épargne en France. 1818-1881. Une étude sociale", Revue d'histoire du XIXe siècle (28)
- ^ The full text of Banks from The New Student's Reference Work at Wikisource
- ^ Dilek Bülbül, Reinhard H. Schmidt & Ulrich Schüwer (September 2013), "Caisses d'épargne et banques coopératives en Europe", Revue d'économie financière (111(3))
- ^ Max Seidel (1908), "Das Sparkassenwesen", Zeitschrift für die gesamte Staatswissenschaft / Journal of Institutional and Theoretical Economics (64:1): 58–107
- ^ Per H. Hansen (December 2007), "Organizational Culture and Organizational Change: The Transformation of Savings Banks in Denmark, 1965—1990", Enterprise & Society (8:4): 920–953
- ^ "Seanad Éireann - 23/Jun/1965 Trustee Savings Bank Bill, 1965: Second and Subsequent Stages". Retrieved 29 January 2016.
- ^ Alane Moysich (1997), "The Mutual Savings Bank Crisis" (PDF), History of the Eighties: Lessons for the Future, vol. 1, Washington DC: Federal Deposit Insurance Corporation
- ^ "The oldest monetary institution in Slovenia". Bankarium.
- ^ Arthur Grimes (February 1998), "Liberalisation of financial markets in New Zealand", Reserve Bank of New Zealand Bulletin (61:4)
- ^ Felipe Portocarrero Maisch (2000), Las cajas municipales de ahorro y crédito: su experiencia en el micro crédito rural en Perú, Inter-American Development Bank
- ^ "Austria's RZB buys Albania's biggest bank". The Banker. 5 January 2004.
- ^ "WSBI Members". WSBI-ESBG.
Bibliography
- "Liberalisation of financial markets in New Zealand" Arthur Grimes, Institute of Policy Studies, Victoria University of Wellington, Wellington, 1998 [1] Retrieved Feb. 11, 2006.
- Tiwari, Rajnish and Buse, Stephan (2006): The German Banking Sector: Competition, Consolidation and Contentment Archived 2016-03-30 at the Wayback Machine, Hamburg University of Technology (TU Hamburg-Harburg)
- Brunner, A., Decressin, J. / Hardy, D. / Kudela, B. (2004): Germany’s Three-Pillar Banking System – Cross-Country Perspectives in Europe, Occasional Paper, International Monetary Fund, Washington, D.C. 2004.
- Mauri, Arnaldo (1969). The Promotion of Thrift and of Savings Banks in Developing Countries, International Savings Bank Institute, Geneva.