The German Co-operative Banking Group

Different organizational designs have often evolved over time for the performance of the same economic or social activity. Such different organizational arrangements can also be found in the provision of financial services. By applying the methodology of comparative organizational analysis, crucial differences between different economic systems can be established. This chapter follows this path by comparing a publicly listed bank (the Deutsche Bank) with the co-operative banking group in Germany. It is striking that the biggest German bank, Deutsche Bank, had total assets of €804 billion at the end of 2003, whereas the credit co-operatives with their central banks and other special finance companies in their group had an aggregated, non-consolidated total assets of approximately €988 billion. This is because the co-operative banking group is not a single legal entity but is made up of about 1,400 independent banks. And this is not the only difference. Also in respect of their strategy, organizational structure, owners and corporate governance, and, last but not least, an understanding of why they are in business at all, the organizational designs differ remarkably.1 In this chapter, the different structures and processes that make up the different organizational designs are compared, and the questions of whether one banking group is more efficient than the other, or whether both institutions have advantages and disadvantages, are answered.