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KfW turns 65
Frankfurt (ots) -
- The Law Concerning KfW came into force on 18 November 1948 - A reliable partner of the economy - Loans totalling EUR 1.3 trillion handed out since foundation
Sixty-five years ago, in November 1948, the economic council of West Germany enacted a law founding KfW, thus creating the basis for sustainable and successful business promotion in Germany. Shortly thereafter, the promotional bank founded when this law came into force on 18 November 1948, began working in Frankfurt under its then name, Kreditanstalt für Wiederaufbau (Reconstruction Loan Corporation). By acting as a conduit for the financial aid donated by the Allies under the Marshall Plan, the institution played a key role in the reconstruction of war-ravaged Germany. KfW's main task has always remained the same. To this day, its remit is to support structural change and identify, promote and fund forward-looking developments in business and society. Since its foundation 65 years ago, KfW has handed out loans of more than EUR 1.3 trillion for this purpose.
"The history of KfW is closely interwoven with the economic development of the Federal Republic of Germany, and impressive proof that the development bank model is a successful concept. It is a macroeconomic instrument for securing German competitiveness and prosperity in Germany and across Europe," said Dr Ulrich Schröder, CEO of KfW. And he added, "Over the decades, the key pillars of our success have been a stable partnership with the government and close cooperation with the credit industry. I would therefore like to thank our partners. Thanks also go to all our current and former employees, whose daily dedication has played a key role in this process and helped KfW meet its promotional mission successfully."
In its first few years, KfW was responsible for funding the reconstruction of the German economy and helping relieve the lack of housing after the Second World War. But its promotional mandate soon expanded beyond Germany's borders. As far back as the early 1950s, the bank was already promoting export. And at the start of the 1960s, the Federal Government added the funding of aid projects in developing nations to its remit.
KfW was particularly sought-after in the 1990s following Germany's reunification. Its tailored promotional programmes supported the redevelopment of the eastern Germany and aided the structural realignment of eastern Germany's corporate sector, while its residential construction programmes helped renovate millions of apartments in the former GDR. Most recently, KfW has been involved in special economic programmes designed to cushion the negative effects of the global financial crisis on the German economy. Its current activities focus on promoting small and medium-sized companies, environmental and climate protection, and efforts to tackle the effects of demographic change both in Germany and around the world.
One decisive factor in KfW's success was that from the very beginning it gave out money as loans rather than subsidies. This meant that once the loans were repaid, the money could be used to provide yet more loans. As a result, KfW still uses Marshall Plan money to fund promotional programmes for entrepreneurs and SMEs; so-called "ERP programmes" (ERP = European Recovery Program, the official name of the Marshall Plan).
KfW is 80% owned by the Federal Government. The remaining 20% is held by Germany's regional states. The KfW Group now also has two subsidiaries: KfW IPEX-Bank and DEG. On 30 September 2013, the KfW Group had a balance sheet total of EUR 476.4 billion, making it one of Germany's biggest banks.
Last year, the KfW Group handed out loans worth EUR 73.4 billion. Thanks to an explicit guarantee by the Federal Government, KfW refinances more than 90% of its loans with bonds purchased on the capital markets. This enables KfW to offer loans at favourable conditions. The KfW Law defines the areas in which it may operate. Some domestic promotional programmes are also sponsored by budget funds or KfW's own funds. KfW loans are generally distributed through the borrowers' banks (on-lending principle), which usually also bear the risk of credit default.
Further information about the creation and history of KfW can be found at the following address: https://www.kfw.de/65-Jahre.