Asavings bank is afinancial institution that is not run on a profit-maximizing basis, and whose original or primary purpose is collecting deposits onsavings accounts that are invested on a low-risk basis and receiveinterest. Savings banks have mostly existed as a separate category inEurope.
Savings banks originated in late-18th century Europe as a development of theEnlightenment, 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 intocooperative banking orcommercial 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.
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 ofcash and it originally referred to acash box, then acash register.
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 usingsavings and the logic ofcompound 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 theFrench Revolution but with no lasting success. Liberal luminaries includingAdam Smith,Thomas Robert Malthus andJean-Baptiste Say took interest in the economic and social role of savings.[1]
The oldest lasting savings bank is widely recognized to have been theErsparungsclasse der Allgemeinen Versorgungsanstalt established inHamburg in 1778, followed by other endeavors in Germany and Switzerland in the late 18th century. Savings banks mushroomed in the early 19th century, with landmark establishments inGöttingen (1801, first municipal savings bank),Ruthwell, Scotland (1810, first in the United Kingdom),Boston (1816, first in the United States),Paris (1818, first in France), andVienna (1819, first in the Austrian Empire). Even so, origin stories of the savings bank concept were long disputed. In 1914, theNew Student's Reference Work said of the origins of savings banks:[2]
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 ofBrumath, 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 withcooperative 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 ingovernment 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.
After a long period of relative stability, including through two world wars and theEuropean 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
Germany: while theErsparungskasse der Allgemeinen Versorgungsanstalt, est. 1778 inHamburg, was a philanthropic endeavor, the dominant model for German savings banks has been sponsorship by local government, starting inGöttingen in 1801. In the early 20th century, savings banks created regional clearing entities, later known asLandesbanks, soon followed by the nationalDeutsche Girozentrale (est. 1918). The German savings banks sector is currently operating as a group with some centralized functions but decentralized organization, theSparkassen-Finanzgruppe which relies on a group-wideinstitutional protection scheme.
Denmark: Holsteinsborg Saving Bank was established in 1810 inSkælskør. The Danish savings banks established a common national entity, theFællesbanken for Danmarks Sparekasser [da], in 1949. Their number declined from over 500 in the 1930s to a bit above 100 by the late 1980s. In 1986-1991, Fællesbanken was dismantled and its components acquired respectively byHafnia Insurance,Sydbank andSparekassen Bikuben, the latter a major savings bank that was eventually merged intoDanske Bank in 2000. The other major savings bank,Sparekassen SDS [da], merged in 1990 into what in 2000 becameNordea. 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, orLokale Pengeinstitutter [da].[5]
France: following theCaisse 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, theGroupe Caisse d'Épargne was converted into acooperative banking group, which in 2009 merged with another cooperative group,Groupe Banque Populaire, to formGroupe BPCE.
Austria: following the 1819 establishment ofErste Bank inVienna, Austrian savings banks have developed first as philanthropic associations and later as local government-sponsored entities. The 1980s and 1990s saw multiple rounds of reform and the departure from the network of the largest savings bank, Vienna'sZentralsparkasse, which eventually became part ofUniCredit. As a result of these changes, theSparkassengruppe Österreich operates largely as a single commercial banking group (and is supervised as such underEuropean Banking Supervision), withErste Group Bank as its central entity.
Slovenia: theKranjska 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] TheLjubljana Municipal Savings Bank [sl] was established in 1889.
Czech Republic: theČeská spořitelna (German:Böhmische Sparkasse) was established in 1825 under the savings bank framework of the Austrian Empire. The savings banks inCzechoslovakia 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 byErste Group.
Hungary: theFirst National Savings Bank of Pest established in 1839-1840, was converted in 1844 into ajoint-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 asOTP Bank.
Slovakia: thePressburger Spar-Casse was established in 1842 in today'sBratislava, followed by other savings bank foundations in what is now Slovakia throughout the 1840s. Today'sSlovenská sporiteľňa, like its Czech equivalent, results from the 1969 division of the State Savings Bank of Czechoslovakia. It was also purchased byErste Group in 2001.
Croatia: as in Hungary (with which Croatia was tied politically untilWorld War I), "savings banks" were largely undistinguishable from commercial banks until the general destruction of the Croatian banking sector followingWorld War II. These included theFirst Croatian Savings Bank (est. 1846) andCity Savings Bank of Zagreb (est. 1913).
New Zealand: The first trustee savings bank was the New Plymouth Savings Bank (est. 1850), later brandedTSB. Savings banks as a legal category disappeared in 1987, being replaced with so-called registered banks.[9]
Chile: theCaja de Ahorros de Empleados Públicos de Chile was established in 1858 for the specific benefit of government employees.
Brazil: theCaixa 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 formCaixa Econômica Federal.
Japan: theTokyo Savings Bank [ja] 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 itselfKyowa Bank [ja] and eventually became part ofResona Holdings as the result of successive mergers and restructurings from 1991 to 2003.
Panama: theCaja 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 asPKO Bank Polski.
Bulgaria: the State Savings Bank (Bulgarian:Държавна спестовна каса / DSK, est. 1951) has becomeDSK Bank, eventually purchased by Hungary'sOTP Bank in 2003.
Ukraine: the State Specialized Commercial Savings Bank of Ukraine was established in 1991 from the formerSavings Bank of the USSR, and converted in 1999 into a state-owned joint-stock bank, theState Savings Bank of Ukraine (Ukrainian:Державний ощадний банк України), also known as Oschadbank.
^Max Seidel (1908),"Das Sparkassenwesen",Zeitschrift für die gesamte Staatswissenschaft / Journal of Institutional and Theoretical Economics,64 (1):58–107,JSTOR40745850
^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
"Liberalisation of financial markets in New Zealand" Arthur Grimes, Institute of Policy Studies,Victoria University of Wellington, Wellington, 1998[1] Retrieved Feb. 11, 2006.
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.
The full text ofBanks from The New Student's Reference Work at Wikisource
