Some of Germany’s numerous credit institutions belong to the Churches. They are extremely active, with transaction volumes amounting to billions of euros.

In Germany there are approximately 3,000 credit institutions – from large banks to smaller ones specializing in private banking, cooperatives and savings banks.

At the same time, however, the …Churches are also active in the industry. Perhaps you would not expect it, and yet, two evangelical and five Catholic banks display balance sheets of billions of euros.

Dortmund-based KD Bank (Evangelical Bank for the Church and Ministry) is currently one of the 30 largest cooperative banks in Germany, with a balance sheet volume of close to 7 billion euros, while the balance sheet of BiB (Diocese Bank of Essen) has capital amounting to 6.5 billion euros.

Customers who want to open an account in these banks do not need to declare their religion. Both KD Bank and BiB are active in the money market offering all the services that a bank can offer to individuals, from loans for the purchase of a car to covering the purchase of a property.

From the 1920s to today

Like most church banks, KD Bank was founded in the 1920s as a loan cooperative to finance church and charitable foundations.

“At that time our founder, the theologian Martin Niemeler, wanted to build a kindergarten, but he could not get a loan from a savings bank or from the local banks to cover his financing,” says Ekehard Tizler, representative of the board of directors. of KD Bank.

From its establishment until today, the focus of the bank’s business activities has not changed, according to Tizler: the bank deals with project lending for Church and Ministry clients. It is mainly about the construction of buildings in the context of social welfare, hospitals, kindergartens and schools. “We also finance social and ecological projects, having granted loans of around three billion euros,” says the spokesman. KD Bank also promotes through loans the construction of new affordable housing, as well as renovations of older buildings.

Bigger surplus than Dortmund’s piggy bank

Churches could of course also take out loans from commercial banks, notes Stefan Paul, professor of finance at the Ruhr University in Bochum. However, as the expert points out, church banks are specialized in this field, which has significant advantages for borrowers. Moreover, “they have already repeatedly financed investments in the construction and maintenance, modernization and expansion of such buildings”. In addition, the terms of church bank loans are often more favorable to the borrower compared to loans granted by large banks.

Of course even church banks don’t give money away. However, as these are cooperative institutions, explains Tizler, their goal is not to maximize profit, but to promote social work. In addition, a long-term business relationship with customers is created – and this “on fair terms”, as Tizler emphasizes.

Last financial year KD Bank, which employs 250 people, had a surplus of 11.8 million euros. So those who own shares in the bank are now going to receive a dividend of 4% per share. Most of the shares are held by members of church foundations. The Dortmund savings bank on the other hand, which has around 300,000 customers and employs 1,520 people, had a net profit of 8 million euros.

A normal commercial bank

In addition to customers from the Church and the Ministry, KD Bank has approximately 28,000 private customers, who are often active professionally or voluntarily in the Church environment. 10% of the bank’s balance sheet comes from private customers.

Stefan Paul is not surprised that there is a tendency for church banks to operate more and more like regular commercial banks. “Many customers prefer to do business with just one bank, rather than finance their home with, say, one bank and their car with another.” In addition, the interest rates offered by church banks to customers who deposit their money are at least as favorable as those of large banks or savings banks.

The same applies to BiB, which has the same goals as KD Bank, employs just 180 employees and has a balance sheet of €6.5 billion. However, as the representative of the BiB board of directors, Peter Gilman, points out, a social-ecological business policy also includes the financing of institutions that grant microloans to developing countries from all over the world: “With the microcredit fund, we finance a total of more than 750,000 people worldwide,” he says. Gilman.

The distance from the big banks is huge

Compared to the big banks, however, such as Deutsche Bank, which in 2023 employed over 90,000 employees and whose balance sheet reached 1,300 billion euros, church banks are obviously far behind.

But it seems that they can give a special moral dimension to the investments of the funds they manage. At the same time, the expansion of the clientele is also important. Last year BiB for example had over 1,500 new private customers, with an increasing trend. According to Gilman about 15% of the transaction volume comes from private customers. “For a bank with a social-ecological orientation, private customers are an important target group. After all, we are not a bank that only wants to do business with institutions, but we seek to do business with the general population as well,” he says.

In order to deal with more individuals the bank must offer the services that commercial banks also offer, for example consumer loans. And based on last year’s balance sheet, BiB’s managers seem to know how to dominate the money market: after taxes, the profit amounted to more than 30 million euros. At the same time the dividends for the members of the ecclesiastical bank increased to 3.5%. “Ethics and capital returns can go hand in hand, and that’s exactly what happens at our bank,” says Gilman.

Edited by: Giorgos Passas