The financing of the economy through banks has proved its worth and is already successfully linked with capital market funding. Banks are a supporting pillar of the European economy: they perform a key function in financing businesses, thus supporting growth, trade and employment. At the heart of European financial market policy, as fleshed out in the capital markets union project, is an overarching objective to strengthen the financing of businesses. Europe’s banking sector has a central role to play in achieving this goal. Member states come from very different starting points. In Germany, for instance, both bank-based and capital-market-based corporate financing function extremely well. But the EU’s financial market policy risks draining the economy of funding power. Lawmakers and regulators need to have a clear idea of how much banks can do to provide finance for businesses – even in a changing market environment – and what framework conditions are required to ensure they can operate in an optimal manner. Our aim is to present a clear overview of the role of European banks. Banks perform an important, tried and tested intermediation function, especially by analysing and managing risks, not least when capital market funding is involved. This function should not be disrupted by separating banks from the capital markets.

1. THE IMPORTANCE OF THE PRIVATE
BANKS TO THE GERMAN ECONOMY
Frank Brückbauer (ZEW)
Professor Jörg Rocholl, Ph.D (ESMT Berlin)
Professor Sascha Steffen (Frankfurt School)
A study commissioned by the
Association of German Banks
December 2017

2. THE IMPORTANCE OF THE
PRIVATE BANKS TO EXPORT
FINANCING

3. Notes: Market share calculated as turnover x share of exports by banking category for 2015 based on 22,411 individual companies and an
absolute export volume of approx. 855 billion euros. Market shares do not total 100% due to rounding.
Sources: BVD: Dafne, ZEW: Mannheim Enterprise Panel
3
88%
6%
4%
3%
Market shares
Private banks Savings banks
Cooperative banks Landesbanken
THE CLIENTS OF THE PRIVATE BANKS HAVE THE LARGEST
SHARE OF EXPORT VOLUMES
The importance of the private banks to the German economy
94.9
6.1 5.7
37.2
Private banks Savings banks Cooperative
banks
Landesbanken
Average export volume
in €m

4. Notes: Market share calculated as turnover x share of exports by banking category for 2015 based on 22,411 individual companies and an
absolute export volume of approx. 855 billion euros. Market shares do not total 100% due to rounding.
Sources: BVD: Dafne, ZEW: Mannheim Enterprise Panel
4
THE CLIENTS OF THE PRIVATE BANKS HAVE THE LARGEST SHARE OF
EXPORT VOLUMES THROUGHOUT GERMANY
The importance of the private banks to the German economy
Federal state
All
companies
Principal bank
Private banks Savings banks Cooperative banks Landesbanken
Number of
companies
Number of
companies
Market share
Number of
companies
Market share
Number of
companies
Market share
Number of
companies
Market share
Baden-Württemberg 4,372 910 85% 1,634 6% 1,511 3% 317 6%
Bavaria 3,952 1,620 89% 1,269 4% 1,033 5% 30 1%
Bremen 169 86 71% 59 21% 8 0% 16 8%
Hamburg 462 290 97% 140 2% 24 1% 8 0%
Hesse 1,810 654 91% 583 5% 522 3% 51 1%
Lower Saxony 1,387 451 82% 516 8% 363 8% 57 2%
North Rhine-Westphalia 5,671 2,032 90% 2,311 6% 1,312 4% 16 0%
Rhineland-Palatinate 1,241 281 81% 539 14% 414 4% 7 2%
Saarland 306 69 76% 130 7% 102 10% 5 7%
Schleswig-Holstein 675 299 64% 229 12% 135 19% 12 5%
New Länder (former GDR)
+ Berlin
2,366 1,273 92% 566 2% 407 2% 120 4%
Total 22,411 7,976 88% 5,831 6% 7,965 4% 639 3%

5. Notes: Market share calculated as turnover x share of exports by banking category for 2015 based on 22,411 individual companies and an
absolute export volume of approx. 855 billion euros. Market shares do not total 100% due to rounding.
Sources: BVD: Dafne, ZEW: Mannheim Enterprise Panel
5
THE CLIENTS OF THE PRIVATE BANKS HAVE THE LARGEST
SHARE OF EXPORT VOLUMES IN ALL SIZES OF TURNOVER
The importance of the private banks to the German economy
Turnover in €m All companies
Principal bank
Private banks Savings banks
Cooperative
banks
Landesbanken
All
companies
Average share
of exports
Market share Market share Market share Market share
up to 50 19,518 27% 49% 28% 19% 4%
50 to 100 1,310 40% 65% 22% 9% 4%
100 to 250 869 41% 75% 13% 7% 5%
250 to 1000 435 47% 75% 12% 7% 5%
over 1000 279 42% 94% 2% 2% 2%
Total 22,411 29% 88% 6% 4% 3%

6. THE IMPORTANCE OF THE
PRIVATE BANKS TO GERMAN
HIDDEN CHAMPIONS

7. 7
ZEW: Rammer and Spielkamp (2015):
1. Less than 10,000 employees in Germany
2. Majority of sales outside Germany
3. Position in the market
 ≥10% for market volumes <€200m
 ≥ 7% for market volumes between €200m and €500m
 ≥ 3 % for market volumes between €500m and €1,000m
 ≥ 1 % for market volumes over €1,000m
4. Above-average growth in the previous five years; at least 10 percentage points above
the average growth of companies in the same industry
Criteria 1-4 must have been met simultaneously at least once in the years 2008, 2010, 2012
or 2014 in the “Mannheim Innovation Panel” survey and information about the company’s
relations with its principal bank must be available.
HIDDEN CHAMPIONS WERE DEFINED AS COMPANIES MEETING
THE FOLLOWING CRITERIA
The importance of the private banks to the German economy

8. 8
Rammer und Spielkamp (2015): Hidden champions …
• … focus particularly on increasing their market share and opening up new
geographical markets.
• … give priority when developing new products to the introduction of market
innovations and are highly successful in this respect.
• … frequently invest continuously in research and development.
• … grant an especially large number of research and development contracts to
third parties and cooperate with universities, colleges of higher education and
state research facilities.
• … see acquiring a time advantage over their competitors as the main means of
protecting their own market position.
HIDDEN CHAMPIONS AIM AT STRONG MARKET POSITIONS
AND ACHIEVE THEIR GOALS THROUGH INNOVATION
The importance of the private banks to the German economy

9. Note: 2008-2014 average figures
Source: ZEW: Mannheim Innovation Panel
MOST HIDDEN CHAMPIONS HAVE LESS THAN 250 EMPLOYEES
The importance of the private banks to the German economy 9
53%37%
6%
3% 1%
Hidden champions by number of employees
5-49 50-249 250-499 500-999 over 1000

10. Note: 2008-2014 average figures
Source: ZEW: Mannheim Innovation Panel
MOST HIDDEN CHAMPIONS HAVE A TURNOVER OF LESS THAN
50 MILLION EUROS
The importance of the private banks to the German economy 10
43%
34%
12%
8%
2% 1%
Hidden champions by turnover in €m
under 10 10 to 50 50 to 100 100 to 250 250 to 1000 over 1000

11. Notes: The annual figures are for the year of the corresponding survey. Market shares by number of companies. Market
shares may not total 100% due to rounding.
Sources: ZEW: Mannheim Innovation Panel, Mannheim Enterprise Panel
THE MAJORITY OF HIDDEN CHAMPIONS ARE CLIENTS OF
PRIVATE BANKS
The importance of the private banks to the German economy 11
50%
60% 59%
50%
67% 69% 65%
23%
21% 27%
24%
23% 19% 28%
21%
16% 12%
21%
9% 9%
6%6% 3% 2% 5% 2% 3%
1%
2009 2010 2011 2012 2013 2014 2015
Market shares of all hidden champions
Private banks Savings banks Cooperative banks Landesbanken average
market share
1%
13 %
25%
61%

12. Notes: 2008-2014 average market shares. Market shares by number of companies. Market shares may not total 100%
due to rounding.
Sources: ZEW: Mannheim Innovation Panel, Mannheim Enterprise Panel
THE PRIVATE BANKS LEAD THE MARKET IN ALL MEASURES
The importance of the private banks to the German economy 12
Turnover in €m
All hidden
champions
Principal bank
Private banks Savings banks Cooperative banks Landesbanken
Number of
companies
Number of
companies
Market share
Number of
companies
Market share
Number of
companies
Market share
Number of
companies
Market share
up to 10 1,211 628 52% 323 27% 233 19% 27 2%
up to 50 2,163 1,183 55% 618 29% 335 15% 27 1%
50 to 100 323 251 78% 67 21% 5 2% 0 0%
100 to 250 210 192 91% 14 7% 2 1% 2 1%
250 to 1000 66 56 85% 2 3% 4 6% 4 6%
over 1000 28 23 81% 0 0% 5 18% 0 0%
Number of
employees
All hidden
champions
Principal bank
Private banks Savings banks Cooperative banks Landesbanken
Number of
companies
Number of
companies
Market share
Number of
companies
Market share
Number of
companies
Market share
Number of
companies
Market share
5-49 1,478 836 57% 395 27% 220 15% 27 2%
50-249 1,041 682 66% 242 23% 117 11% 0 0%
250-499 170 110 65% 49 29% 11 6% 0 0%
500-999 74 52 71% 13 18% 3 4% 6 7%
over 1000 27 25 93% 2 7% 0 0% 0 0%

13. APPENDIX

14. 14
Mannheim Innovation Panel surveys from 2009 to 2015:
• The MIP survey is based on representative data collected annually by the ZEW
on the innovation behaviour of German companies.
• Population: approx. 280,000 companies with a staff of at least five.
Excluded sectors: agriculture and forestry, fishery, construction, automotive
dealing/repair services, retail industry, hotel and restaurant industry, real estate,
business administration, veterinary services, renting and leasing, education and
health care services, public authorities, consumer-oriented and cultural services
• Covers the period 2007-2014.
Mannheim Enterprise Panel:
• The Mannheim Enterprise Panel is the largest panel data set of companies in
Germany outside of official statistics.
• It contains information on the principal bank used by the companies.
MAIN SOURCES OF DATA FOR THE SURVEYS ON HIDDEN
CHAMPIONS ARE ZEW’S MANNHEIM INNOVATION PANEL AND
MANNHEIM ENTERPRISE PANEL
The importance of the private banks to the German economy

15. 15
Rammer, C., & Spielkamp, A. (2015). Hidden Champions-Driven by Innovation:
Empirische Befunde auf Basis des Mannheimer Innovationspanels (Empirical
findings based on the Mannheim Innovation Panel ) (No. 15-03)
ZEW publication
BIBLIOGRAPHY
The importance of the private banks to the German economy