Publicly-owned banks also constitute one of the three pillars of Germany’s banking system
(cooperative and commercial banks are the other two).
Germany’s savings banks are mainly
owned by the municipalities while the so-called Landesbanken are typically owned by regional
savings bank associations and the state governments. State guarantees for the publicly owned
banks were abolished in 2005 due to pressure from the EU Commission, though outstanding debt
at that time was grandfathered until the end of 2015.
There are also many state-owned
promotional/development banks which have taken on larger governmental roles in financing
infrastructure. This increased role removes expenditures from public budgets, particularly
helpful in light of Germany’s balanced budget rules, which go into effect for the states in 2019.