DZ Bank Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The DZ Bank, or to give its full name, the Deutsche Zentralgenossenschaftbank (or German Central Cooperative Bank), is based in Frankfurt, Germany, with headquarters in the DZ Bank Tower; as a major commercial bank, it is one of the largest in Germany. In addition to having its own customers, the DZ Bank AG works alongside WGZ-Bank, which controls the administration for some 1,400 cooperative banks. This represents about 75 percent of all the Volksbanks and the Raiffeisenbanks in Germany and also in neighboring Austria. In some ways the history of the bank is not dissimilar to the Trustee Savings Bank in Britain, which brought together a loose “federation” of savings institutions and is now a part of Lloyds TSB Group.

The origins of the bank lie in the establishment of a range of loan institutions known as the Volksbanken, which were founded and promoted by Hermann Schulze-Delitzsch (1808–83), a politician and the founder of the commercial cooperative system in an effort to encourage thrift and saving among the urban lower middle class and also the working class. Soon after this, Friedrich Wilhelm Raiffeisen (1818–88) became heavily involved in the expansion of the rural cooperative loan associations that led to the establishment of what became known as the Raiffeisen banks after the man most associated with the promotion of them. However, it was Wilhelm Haas (1839–1913) who, in 1883, established the Landwirtschaftliche Genossenschaftsbank AG in Darmstadt, in the state of Hesse, in the west of Germany, and the Preuische Zentralgenossenschaftskasse, which operated in Berlin to help encourage savings in the German capital.

This myriad of structures led to the creation of a three-tier banking system that was to lead to many problems in the 1920s, but also allowed the various tiers to help the others at times of major crisis. The cooperative movement managed to survive the Great Inflation of 1923; to strengthen the system, the Frankfurt Cooperative Pact of 1929 resulted in the Preuenkasse becoming the central credit institution for the entire rural cooperative system in Germany. By the outbreak of World War II in 1939, the bank had been renamed the Deutsche Zentralgenossenschaftskasse and helped provide stability for the entire Volksbanken system.

The system of tiers of banks continued, but in 1972 the Federal Association of German Cooperative Banks was established and there was a merger between the Volksbanken and the Raiffeisenbanken. Three years later the DG Bank was established to bring these cooperative banks together in a state-owned corporation. In 1975 the bank was restructured, and in 1985 it slowly eroded the three-tier system. In 2000, the DG Bank was eager to expand after a bad banking year in which its risky loans quadrupled, with problems arising from rural credit over mad cow disease and foot-and-mouth disease. Finally on June 24, 2001, the DG Bank and the GZ Bank merged to form the DZ Bank, which was at that time the sixth-largest bank in Germany; the merger was completed in September 2001.

The structure of the DZ Bank remains complicated, as it controls some 1,250 local cooperative banks and services some 30 million customers. The DZ Bank includes Bausparkasse Schwäbisch Hall, DG HYP, DZ Bank International, DZ Privatbank Schweiz, R+V Versicherung, TeamBank, Union Investment Group, and VR Leasing. As with other banking institutions, the DZ Bank Group also is involved in insurance, arranging reinsurance, and the provision of various levels of financial services to individuals and businesses. The DZ Bank also has established branches outside Germany with offices in the Cayman Islands, Hong Kong, London, Mexico City, Milan, New York, Sao Paulo, and Singapore, as well as operating subsidiaries in Hungary, the Irish Republic, Luxembourg, and Poland; and the DZ Bank International SA in Spain and the DZ Privatbank Schweiz in Switzerland. Its representatives have branches in Beijing and Shanghai, Istanbul, Moscow, Mumbai, and Tokyo. It also operates through other parts of western Europe through alliances and arrangements with banks in Belgium, France, the Netherlands, and other countries.

Bibliography:

“125 Years DZ Bank,” www.dzbank.com (cited March 2009);
Suzanna Kapner, “A Bank Merger Would Create the 6th-Largest in Germany,” New York Times (June 25, 2001);
Mark Landler, “5 Big Banks in Germany in Loan Pool,” New York Times (April 23, 2003).

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