KfW data and facts

KfW is one of the world’s leading promotional banks. The aim of its work is to improve economic, social and ecological living conditions. The abbreviation KfW stands for Kreditanstalt für Wiederaufbau. The bank is a public-law institution, which means it has a legally defined public mission. More precisely, KfW is a banking group made up of several subsidiaries.

The legal basis for its business activities is the so-called KfW Act. The Federal Ministry of Finance exercises legal supervision over the KfW Bank.

KfW is headquartered in Frankfurt am Main and has a branch in Berlin. It was founded in the post-war period on 16 December 1948 and is today the third-largest bank in the Federal Republic of Germany.

A total of more than 4,700 employees work at KfW. In 2011 the balance sheet total was just under 500 billion euros. KfW is subject to the Federal Ministry of Finance, which also has legal supervision.

However, KfW does not belong to the public sector of the Federal Republic of Germany. It is listed by the European Central Bank on the MFI list. Monetary Financial Institutions (MFIs) are credit institutions that accept deposits, which are then issued again as loans on their own account.

KfW’s balance sheet is not included in the federal budget. The bank’s Chief Executive Officer is Ulrich Schröder, and the Chairman of the Supervisory Board is Philipp Rösler.

KfW is financed itself through promotional programs such as the ERP economic stimulus program, but also by investors and the interest on loans.

KfW responsibilities

KfW is responsible for ensuring the financing of the implementation of public mandates. The KfW Bank performs certain tasks that are in the public interest. These include support for small and medium-sized enterprises (SMEs), support programs for start-ups and the provision of investment loans to small and medium-sized companies.

KfW also finances infrastructure measures, in particular in the municipal sector, and housing projects. Promotion of energy-saving technologies has become increasingly important.

But the provision of training and student loans, film financing, export and individual project financing, as well as participation in development aid efforts for developing countries, are also part of KfW Bank’s responsibilities. As part of support for training and study, grants are also awarded for further education measures such as master craftsman training.

Despite its public-interest tasks, KfW Bank is not classified as part of the public sector. KfW Entwicklungsbank is classified by the European Central Bank as a Monetary Financial Institution (MFI). Under a special rule of the European System of National and Regional Accounts (ESA) that has existed since 1995, the assets and liabilities of an MFI are not assigned to the state.

After German reunification, KfW has been responsible as a development bank for implementing programs aimed at rebuilding the economy in the new federal states.

Support for housing, construction and modernization

A very large area of KfW’s work is support for housing, construction and energy-efficiency measures through low-interest loans. There is a wide range of programs for creating home ownership, modernizing existing housing, energetic building refurbishment and the installation of photovoltaic systems.

Projects that reduce CO2 emissions and ensure recognized energy standards for buildings are supported by an annual funding volume of 17 billion euros. The aim of these subsidies is to meet the national climate protection program in accordance with the Kyoto Protocol.

For certain refurbishment measures, both grants from KfW and from the federal government can be applied for.

KfW institutions

The subsidiary KfW Mittelstandsbank supports German small and medium-sized enterprises and start-ups with loans and other financing instruments. KfW Mittelstandsbank was created in 2003 through the merger of Deutsche Ausgleichsbank with KfW.

KfW’s promotional bank offers a wide range of credit instruments in the areas of energy, housing and construction that benefit residential property. Supported measures include the construction of new housing, energy-saving refurbishments of buildings, housing modernization and photovoltaic systems.

To make KfW programs for CO2 reduction as attractive as possible and thus contribute to compliance with international climate protection agreements, the Federal Republic of Germany has provided KfW with one billion euros annually since 2006. KfW rules for granting these loans (KfW-40 and KfW-60) have become recognized energy standards in the construction industry.

German municipalities are supported by loans from KfW Entwicklungsbank in financing their public facilities. These include, for example, local transport and sports facilities as well as wastewater pipeline networks. Professionals, students and pupils have access to training and further education loans from the promotional bank.

KfW’s activities abroad

KfW IPEX-Bank provides financing primarily to customers of German exporters. Worldwide, KfW IPEX-Bank participates in investment measures in which there is also a German and European interest in execution. Because these loans can compete with other credit institutions, the business area was outsourced to a separate bank that offers its loans on market terms.

Emerging and developing countries are supported, among other things, by the special credit facilities of the "Initiative for Climate and Environmental Protection". While the subsidiary Deutsche Investitions- und Entwicklungsgesellschaft (DEG) promotes the private sector in the Third World, KfW Entwicklungsbank works with state institutions.

KfW as advisor to the state

The Kreditanstalt für Wiederaufbau advises the federal government on the privatization of state-owned enterprises. This was the case, for example, with the privatization of Deutsche Post AG and Deutsche Telekom AG.

KfW also manages the contracts of the Federal Institution for Unification-related Special Tasks, which emerged from the former Treuhandanstalt (BvS). KfW performs the same function for the compensation scheme of securities trading firms, which compensates individual savers in the event of insolvency up to 20,000 euros.

KfW development since 1948

The founding of KfW on 16 December 1948 aimed to finance the reconstruction of the German economy destroyed in the Second World War. Funds from the European Recovery Program (Marshall Plan) served as start-up capital.

Otto Schniewind was Chairman of the Supervisory Board. Hermann Josef Abs was appointed his deputy. The main owner of KfW is the Federal Republic of Germany with a capital share of 80%, while the federal states hold 20%.

The Federal Republic of Germany is liable for all liabilities of KfW and all loans issued by the bank in accordance with § 1a of the KfW Act. In addition, there is a so-called "Anstaltslast" of the Federal Republic for KfW, according to which Germany must provide the bank with the capital necessary to fulfil its tasks.

KfW’s creditworthiness is rated with top marks by international rating agencies. At the end of 2011, KfW’s balance sheet total amounted to 494.8 billion euros, making the institution one of the largest German banks.

KfW after reunification

Since German reunification in 1990, KfW has also participated in the economic reconstruction of the new federal states. From 2000 onwards, credit institutions can relieve their balance sheets under KfW credit securitization programs by selling SME loans ("PROMISE") and real estate loans ("PROVIDE") on the capital market after securitization.

KfW also plays a significant role in financing bilateral development cooperation. In 2010 the institute committed development loans from the Federal Ministry for Economic Cooperation amounting to more than 1.4 billion euros and additionally granted loans from its own funds of more than 2.8 billion euros.

Approximately 3,300 employees work at KfW’s Frankfurt headquarters. There are also smaller locations in Berlin and Bonn. In total, the KfW banking group employs around 3,800 people. The bank’s bodies, in addition to the Executive Board and the Supervisory Board, include the so-called Mittelstandsrat, which has an advisory role in SME promotion.

Millions in losses during the financial crisis

The institute had to report heavy losses on its balance sheet due to its involvement with IKB Deutsche Industriebank AG, based in Düsseldorf. KfW stabilized the German banking and money market during the 2007 financial crisis by taking over around one billion euros of risky balance sheet positions from IKB.

KfW also made headlines in September 2008 because it transferred 350 million euros to the American investment bank Lehman Brothers, even though the impending insolvency of the American financial institution was foreseeable. After public criticism of the bank’s internal control mechanisms, two of the responsible board members were relieved of their duties.

Part of the money is said to have been repaid in the meantime. Whether the remaining sum can still be recovered depends on the outcome of the American investment bank’s insolvency proceedings.

As reported by the Süddeutsche Zeitung on 2 May 2010, KfW’s efforts to recover the entire transfer amount were discontinued. KfW also had to accept partial losses on an investment of 288 million euros in Iceland. Nevertheless, KfW is rated by international rating agencies with the highest possible creditworthiness, Triple A/AAA.

Historical archive

The KfW Historical Archive is located in Berlin at Charlottenstrasse 33. In the renovated, listed building of the former Berliner Handelsgesellschaft, research can now be carried out on the significance of the Kreditanstalt für Wiederaufbau for the reconstruction of Germany.