Shanghai Daily | 上海日报 -- English Window to China News

IN Dusseldorf, a city-owned bank, one-fiftieth the size of Deutsche Bank AG, is taking on Germany's largest lenders in a bid to entice savers spooked by the collapse of financial companies across Europe.

"Has your bank gone?" says Stadtsparkasse Dusseldorf's newspaper advertisement, which features a picture of an empty bench overlooking a lake. "Then just come and see us."

State and customer-owned banks are using people's fears about the safety of their money to fend off the likes of Dresdner Bank and Commerzbank AG and defend their dominant position on main streets across Germany, according to Bloomberg News.

Deposits at the smaller banks' 16,000 branches rose by more than 1 billion euros (US$1.28 billion) since the end of last month, according to a Bild-Zeitung survey.

"Savings and cooperative banks kept out of toxic assets," said Joachim Weicht, a databank administrator in Frankfurt.

"After the dust has settled, I'll sell all my mutual funds and Commerzbank shares and move money from Dresdner to savings certificates."

New money continued to arrive even after Chancellor Angela Merkel on October 5 guaranteed all German deposits.

Savings banks in Baden-Wuerttemberg, home to companies including Daimler AG and Porsche SE, are posting the biggest gains in customer deposits since 2001, the year of the September 11 terrorist attacks, according to their head Peter Schneider.

Stadtsparkasse Dusseldorf took in 200 million euros after its ad campaign, matching its entire 2006 intake.

"I took a large part of my savings off from my Citibank account and transferred it" to a savings banks account, said Erika Rubinstein, an interpreter who lives in Dusseldorf. Hamburger Sparkasse, Germany's biggest city-owned savings bank, gained new deposits of 500 million euros during the last month, "significantly more than normal," spokesman Andre Grunert said.

Savings banks in the cities of Leipzig, Dresden and Hanover said customer inflows are "clearly above" average.

In comparison, Deutsche Bank, Germany's biggest bank, said deposits have risen by 1 billion euros over the last five weeks, which is about average, according to spokesman Michael Lermer.

Dresdner Bank spokeswoman Renate Christ declined to comment on customer deposits at the Frankfurt-based bank.

Commerzbank's deposits rose by 5 percent in the third quarter, spokesman Stefan Roberg said.

The association that represents Germany's 446 savings banks has fully backed deposits for the past three decades.

The guarantee safeguarding the country's 1,232 customer-controlled banks dates to 1934. State and customer-owned banks control about 79 percent of the nation's savings.

Merkel's promise

"German savers ask themselves if they can trust Angela Merkel's words or not," said Max Mailhammer, 64, from Bad Griesbach in southern Germany.

"Nobody knows if the politicians really reveal all the risks. German savings and mutual banks have always deserved our trust so far."

State-owned lenders haven't been immune from loan losses triggered by the collapse of the subprime mortgage market.

Bayerische Landesbank, Germany's second-biggest state-owned lender, said yesterday it may tap the bank-rescue package provided by the government after almost 5 billion euros of debt-related investment markdowns.

Landesbanken, which serve as savings banks' central banks and clearing houses in Germany, have announced writedowns of more than 15 billion euros related to the financial market crisis so far.

No longer boring

Within five days in August 2007, two of Dusseldorf's biggest banks, WestLB AG and IKB Deutsche Industriebank AG, ousted their top executives after losses from trading and investments in United States mortgages.

Neither had retail operations, and state and customer-owned banks remain at the heart of the German banking system. About 42 million people, or 52 percent of Germans, have accounts with savings banks, according to Berlin-based DSGV, the savings bank association.

Yet, as bigger commercial rivals offered higher interest rates, Germans began to view these banks as "boring," said Gabriele Makus, a 44-year-old letting agent in Frankfurt.

She changed her mind as banks started to falter.

Hypo Real Estate Holding AG, Germany's second-biggest commercial-property lender, on October 5 got a revised 50-billion-euro bailout after its Dublin-based Depfa Bank Plc unit, which lends to governments, failed to get short-term funding.

Germany's financial-services regulator BaFin ordered the German unit of Iceland's Kaupthing Bank on October 9 to stop selling assets or making payments to preserve remaining assets.

After closing her wealth management fund at Dresdner Bank, Gabriele Makus is opening an account with the Bundesfinanzagentur, through which customers buy government securities.