Kreditanstalt Für Wiederaufbau
   HOME

TheInfoList



OR:

The KfW, which together with its subsidiaries DEG, KfW IPEX-Bank and FuB forms the KfW Bankengruppe ("banking group"), is a German state-owned
investment Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing i ...
and
development bank A development financial institution (DFI), also known as a development bank or development finance company (DFC), is a financial institution that provides risk capital for economic development projects on a non-commercial basis. , total commitme ...
, based in
Frankfurt Frankfurt, officially Frankfurt am Main (; Hessian: , "Frank ford on the Main"), is the most populous city in the German state of Hesse. Its 791,000 inhabitants as of 2022 make it the fifth-most populous city in Germany. Located on its na ...
. As of 2014, it is the world's largest national development bank and as of 2018 Germany’s third largest bank by balance sheet. Its name originally comes from Kreditanstalt für Wiederaufbau ("Credit Institute for Reconstruction"). It was formed in 1948 after
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
as part of the
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred over $13 billion (equivalent of about $ in ) in economic re ...
.


Governance

KfW is owned by the Federal Republic of Germany (80 percent) and the States of Germany (20 percent). It is led by a five-member Executive Board headed by
CEO A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...
, which in turn reports to a 37member Board of Supervisory Directors. The Chair and Deputy Chair of the Board of Supervisory Directors are the German Federal Ministers of
Finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...
and of
Economic Affairs An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...
, with the positions alternating annually between them. The chairman as of May 2021 is
Robert Habeck Robert Habeck (; born 2 September 1969) is a German politician and writer who has been serving as Vice Chancellor of Germany, Federal Ministry for Economic Affairs and Climate Action, Federal Minister for Economic Affairs and Climate Action in ...
, Federal Minister for Economic Affairs and Climate Action. In 2009,
Caisse des Dépots Caisse, a French word, may refer to: * Caisse Desjardins, an association of credit unions in Quebec * Caisse d'Epargne-Illes Balears, a road-bicycle racing team *Caisse de dépôt et placement du Québec, a public pension fund in Quebec * Caisse n ...
,
Cassa Depositi e Prestiti Cassa Depositi e Prestiti S.p.A. (also kwown as CDP or CDP Group) is a prominent Italian investment bank founded on November 20, 1850, in Turin. Its main duty was to finance public works like roads and waterworks during the reign of Victor Emman ...
, KfW and
European Investment Bank The European Investment Bank (EIB) is the European Union's investment bank and is owned by the EU Member States. It is one of the largest supranational lenders in the world. The EIB finances and invests both through equity and debt solutions ...
founded the Long-Term Investors Club.


Operations

KfW banking group covers over 90% of its borrowing needs in the
capital markets A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers to ...
, mainly through bonds that are guaranteed by the federal government. This allows KfW to raise funds at advantageous conditions. Its exemption from having to pay corporate taxes due to its legal status as a public agency and unremunerated equity provided by its public shareholders allow KfW to provide loans for purposes prescribed by the KfW law at lower rates than commercial banks. KfW is not allowed to compete with commercial banks, but it facilitates their business in areas within its mandate. KfW banking group has three business units with distinct functions, as well as several subsidiaries. Lending by KfW group’s two main business units, accounting for more than 90% of total lending, is in Germany and, to a limited extent, in other European countries. However, its largest subsidiary,
KfW IPEX-Bank The KfW IPEX-Bank GmbH is a wholly owned subsidiary of KfW (''Kreditanstalt für Wiederaufbau''; engl. credit institute for reconstruction) and since 1 January 2008 acts as a legally independent bank governed by the German Banking Act. Its work foc ...
GmbH, predominantly lends internationally. A smaller subsidiary, the
German Investment Corporation Deutsche Investitions- und Entwicklungsgesellschaft (DEG) is a Development Finance Institution (DFI) and a subsidiary of KfW Group. It was founded in Cologne in September 1962 as a federally owned company by the former Federal President Walter ...
(DEG), and one of the group’s smaller business units, KfW Development Bank, are exclusively active in the international arena, each within their particular business areas.


Subsidiaries and group units


Housing and environment

KfW Förderbank (KfW promotional Bank), the largest business unit of the group, committed
The euro sign () is the currency sign used for the euro, the official currency of the eurozone and unilaterally adopted by Kosovo and Montenegro. The design was presented to the public by the European Commission on 12 December 1996. It consists o ...
47.6 billion in 2014, mostly for housing and environmental protection in Germany.KfW Bankengruppe:Key Business Figures
It is especially active in promoting energy-efficient housing for owner-occupied houses as well as for landlords, both for new houses and refurbishments. Its energy efficiency standards for houses (KfW-60 and KfW-40) have become accepted standards in Germany. Concerning environmental protection, it promotes, among others, photovoltaic energy (
solar cell A solar cell, or photovoltaic cell, is an electronic device that converts the energy of light directly into electricity by the photovoltaic effect, which is a physical and chemical phenomenon.
s) which has in turn received massive indirect subsidies through
feed-in tariff A feed-in tariff (FIT, FiT, standard offer contract,Couture, T., Cory, K., Kreycik, C., Williams, E., (2010)Policymaker's Guide to Feed-in Tariff Policy Design National Renewable Energy Laboratory, U.S. Dept. of Energy advanced renewable tariff, ...
s under the
Renewable Energy Law Renewable energy law is a particular kind of energy law, and relates primarily to the transactional legal and policy issues that surround the development, implementation, and commercialization of Renewable energy, renewable sources of energy, such ...
of 2000. It also invests in municipal infrastructure such as public transport and sanitation through a sub-unit called KfW Kommunalbank (KfW municipal bank). More recently (since 2006), it has also engaged in education where it provides student loans.


Small and medium enterprises

KfW Mittelstandsbank (which roughly translates as KfW small and medium enterprises bank), the second largest business unit of the group, provides assistance to German
small and medium enterprises Small and medium-sized enterprises (SMEs) or small and medium-sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank ...
(SMEs) including individual entrepreneurs and start-ups. In addition to loans it also provides equity and
mezzanine financing In finance, mezzanine capital is any subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares. Mezzanine financings can be structured either as debt (typicall ...
. Its financing totaled €20.4 billion in 2015. KfW has been very active in
securitization Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling ...
before this market collapsed during the
subprime mortgage crisis The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the Financial crisis of 2007–2008, 2007–2008 global financial crisis. It was triggered by a large decline ...
. Through securitization it helped commercial banks to transfer risks from their housing and SME portfolios to the capital market. KfW also provides loans to European commercial banks to help them finance SMEs, housing and infrastructure (so-called global loans).


Development aid

KfW Entwicklungsbank (KfW Development Bank) provides financing to governments, public enterprises and commercial banks engaged in
microfinance Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings ...
and SME promotion in developing countries. It does so through loans close to market terms using its own resources ("promotional loans"), soft loans that blend KfW resources with support from the federal government's aid budget ("development loans"), as well as highly subsidized loans and grants, the latter two coming entirely from the federal aid budget. Different country groups are offered different financing conditions depending mainly on their per capita income. All these financing instruments are part of what is officially called
development cooperation Development aid is a type of foreign/international/overseas aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries. Closely-related concepts include: developm ...
and is more commonly called "
development aid Development aid is a type of aid, foreign/international/overseas aid given by governments and other agencies to support the economic, environmental, social, and political International development, development of developing countries. Closely-rel ...
". In German aid, the work of KfW Development Bank is called "financial cooperation" which is complemented by "technical cooperation" by GIZ and other public agencies. The main sectors of financial cooperation are water supply and sanitation, renewable energy and energy efficiency, as well as the development of the financial sector. KfW Development Bank also works, among other sectors, in health, education, agriculture, forestry, solid waste management. It provided €7.4 billion in loans and grants in 2014.


Export and project finance

The largest subsidiary of KfW banking group is KfW IPEX-Bank. KfW IPEX-Bank is active in
project finance Project finance is the long-term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of its sponsors. Usually, a project financing structure involves a number of equi ...
and
corporate finance Corporate finance is the area of finance that deals with the sources of funding, the capital structure of corporations, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and anal ...
related to German or European exports. It also promotes foreign investments in Germany. Unlike KfW, it competes directly with commercial banks. Therefore, and in response to concerns voiced by the European Commission concerning unfair competition, KfW IPEX-Bank has become legally and financially independent in 2008. KfW IPEX-Bank's main sectors of activity are ports, airports, toll roads, bridges and tunnels, railways, ships, planes, telecommunications, energy, and manufacturing. In 2014 the balance sheet total of KfW IPEX-Bank amounted to
The euro sign () is the currency sign used for the euro, the official currency of the eurozone and unilaterally adopted by Kosovo and Montenegro. The design was presented to the public by the European Commission on 12 December 1996. It consists o ...
26.3 billion. Another subsidiary of KfW banking group, the
German Investment Corporation Deutsche Investitions- und Entwicklungsgesellschaft (DEG) is a Development Finance Institution (DFI) and a subsidiary of KfW Group. It was founded in Cologne in September 1962 as a federally owned company by the former Federal President Walter ...
(DEG), takes minority equity stakes and provides loans to private companies investing in developing countries. It pursues a business model broadly similar to that of the
International Finance Corporation The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset-management services to encourage private-sector development in less developed countries. The IFC is a member of t ...
of the
World Bank Group The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Grou ...
. Its main sectors of activity are banking, agro-business, renewable energy, telecommunications and manufacturing. It lent 1.2 billion in 2008.


State shareholding

On behalf of the German state, KfW holds shares in a variety of corporations, including
Deutsche Post The Deutsche Post AG, operating under the trade name Deutsche Post DHL Group, is a German multinational package delivery and supply chain management company headquartered in Bonn, Germany. It is one of the world's largest courier companies. T ...
,
Deutsche Telekom Deutsche Telekom AG (; short form often just Telekom, DTAG or DT; stylised as ·T·) is a German telecommunications company that is headquartered in Bonn and is the largest telecommunications provider in Europe by revenue. Deutsche Telekom was ...
,
Commerzbank Commerzbank AG () is a major German bank operating as a universal bank, headquartered in Frankfurt am Main. In the 2019 financial year, the bank was the second largest in Germany by the total value of its balance sheet. Founded in 1870 in Hambur ...
,
Lufthansa Deutsche Lufthansa AG (), commonly shortened to Lufthansa, is the flag carrier of Germany. When combined with its subsidiaries, it is the second- largest airline in Europe in terms of passengers carried. Lufthansa is one of the five founding m ...
, and
CureVac CureVac N.V. is a German biopharmaceutical company that develops therapies based on messenger RNA (mRNA). Legally domiciled in the Netherlands and headquartered in Tübingen, Germany, the company was founded in 2000 by Ingmar Hoerr (CEO), S ...
.


Advisory services

In 2013, KfW agreed to help establish a Portuguese financial institution to foster economic growth and boost job creation in the country.


Awards

The magazine ''Global Finance'' rated KfW as the safest bank in the world in its "World's 50 Safest Banks 2014" rating. The rating was based on long-term foreign currency ratings from
Fitch Ratings Fitch Ratings Inc. is an American credit rating agency and is one of the " Big Three credit rating agencies", the other two being Moody's and Standard & Poor's. It is one of the three nationally recognized statistical rating organizations (NRSRO) ...
and
Standard and Poor's S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is consi ...
and the long-term bank deposit ratings from
Moody's Investors Service Moody's Investors Service, often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Investors Service provides international ...
.


Controversy

In September 2008, as investors were scrambling to get their funds out of
Lehman Brothers Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before Bankruptcy of Lehman Brothers, filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Gol ...
, KfW accidentally wired 426 million to Lehman; Germany's largest circulation newspaper, ''
Bild ''Bild'' (or ''Bild-Zeitung'', ; ) is a German tabloid newspaper published by Axel Springer SE. The paper is published from Monday to Saturday; on Sundays, its sister paper ''Bild am Sonntag'' ("''Bild on Sunday''") is published instead, which ...
'', subsequently called KfW "Germany's Dumbest Bank" at the time.New York Times: Dealbook
/ref> The bank subsequently fired two board members over the transfer. Due to a glitch in the bank’s information technology, KfW again accidentally transferred 7.6 billion euros ($8.2 billion) to four other banks in February 2017 but got the money back, incurring costs of 25,000 euros.Alexander Hübner (March 29, 2017)
German state bank KfW accidentally transferred 7.6 billion euros: exec
''
Reuters Reuters ( ) is a news agency owned by Thomson Reuters Corporation. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide. Reuters is one of the largest news agencies in the world. The agency was estab ...
''.


See also

*
Reconstruction Finance Corporation The Reconstruction Finance Corporation was a government corporation administered by the United States Federal Government between 1932 and 1957 that provided financial support to state and local governments and made loans to banks, railroads, mortgag ...
(United States) *
List of development aid agencies This is a list of development aid agencies which provide regional and international development aid or assistance, divided between national (mainly OECD countries) and international organizations. Agencies of numerous development cooperation part ...


References


External links

*
Company ProfileWorld's 50 Safest Banks 2009
{{Authority control Banks of Germany Companies based in Frankfurt Banks established in 1948 European investment banks Government-owned companies of Germany Public finance of Germany Government-owned banks