First commercial cooperatives
The first cooperatives were set up in Germany in the middle of the nineteenth century. The cooperative system’s pioneers include Hermann Schulze-Delitzsch and Friedrich Wilhelm Raiffeisen, who set up cooperatives for craftsmen and farmers. Hermann Schulze-Delitzsch, who strictly rejected state support, saw his initiative as a self-help scheme for the relevant population groups. In 1849 he founded “raw materials associations” for carpenters and shoemakers. These first commercial cooperatives brought their members significant price advantages with respect to the purchase of raw materials. In the following year together with other citizens from his home town Schulze-Delitzsch set up a Vorschussverein (“disbursement society”), the precursor of the commercial credit cooperatives – later to be called Volksbanken (credit unions). Finally, in 1861 it was decided to establish a central correspondence office, which was managed by Schulze-Delitzsch. Three years later this office gave birth to the General Association of German purchasing and commercial cooperatives based on the self-help principle.
Further information on the founding father of the credit unions (the Volksbanken and Raiffeisenbanken) can be found on the site of GIZ (Genossenschaftshistorisches Informationszentrum (Information Centre for the History of the Cooperatives)).

The rural cooperatives
In 1864 Friedrich Wilhelm Raiffeisen set up the first rural cooperative bank with the Heddesdorfer Darlehnskassen-Verein. A resolution to join the General Association was never implemented, Indeed it was even reversed at a later point in time. Instead, Schulze-Delitzsch’s organisation, which was to be found more in the towns and among craftsmen, was joined by a second cooperative movement on which Raiffeisen left his mark and which was focused on rural areas. With the establishment of the “Anwaltschaftsverband ländlicher Genossenschaften, Neuwied” in June 1877, Raiffeisen created his organisation’s first national association. In 1910 the association moved to Berlin and seven years later was renamed “Generalverband der deutschen Raiffeisengenossenschaften.”

ESTABLISHMENT OF THE LANDWIRTSCHAFTLICHE GENOSSENSCHAFTSBANK IN 1883.

A second rural cooperative organisation
In 1872, another promoter of the cooperative system, Wilhelm Haas,  set up a consumer cooperative society for farmers in Friedberg in the state of Hesse. The goal was to secure price advantages for members purchasing agricultural inputs. Just a few months later, another 15 cooperative purchasing associations managed by Haas came together in the Association of Hessian Agricultural Cooperative Purchasing Societies. Their success proved that they were on the right road. Thus the seed had been sown for the second rural cooperative organisation – alongside that of Raiffeisen. The organisation soon grew beyond the borders of Hesse. For this reason, in July 1883 Haas – together with other leading representatives of the cooperative movement – set up the Association of German Agricultural Cooperatives in Darmstadt. This umbrella association, which was later renamed as “Reich Association of the German Agricultural Cooperatives,” moved to Berlin in 1913.

Landwirtschaftliche Genossenschaftsbank
The fast-growing number of savings and loan banks in Hesse was initially served by the Landwirtschaftliche Kreditbank, Frankfurt am Main. But because of their growing dissatisfaction with this non-cooperative bank, the cooperatives soon decided to set up a central institution of their own. The new bank was to fulfil a liquidity-compensation function and was also to look after the payments and collection system for the joint procurement of agricultural commodities. It was Haas who in 1883 supported the establishment of the Landwirtschaftliche Genossenschaftsbank AG in Darmstadt – DZ BANK’s oldest “roots.” The shareholders were the savings and loan banks of the state of Hesse. Haas and the founding members hoped that this mutually-established bank would strengthen the cooperative system in Hesse.

Nationwide liquidity compensation
For nationwide liquidity compensation the new regional central institution initially used Deutsche Genossenschaftsbank von Soergel, Parrisius & Co., Berlin. The “Soergelbank” had been set up in 1864 as the central institution for the “disbursement societies” of the Schulze-Delitzsch General Association. The expansion of his organisation throughout the entire German empire and unsatisfactory cooperation in the field of supra-regional liquidity compensation prompted Haas to set up his own national central credit institution. As a result, Landwirtschaftliche
Reichsgenossenschaftsbank GmbH was set up in Darmstadt in 1902. Haas deliberately waived cooperation with the Landwirtschaftliche Zentral-Darlehnskasse, which Raiffeisen had set up in 1876 in Neuwied and which was renamed Deutsche Raiffeisenbank AG in 1923.

ESTABLISHMENT OF THE PREUßISCHE ZENTRALGENOSSENSCHAFTSKASSE IN 1885.

“Preußenkasse”
Towards the end of the nineteenth century conditions in the agricultural sector deteriorated. A bank was needed to provide the rural and handicraft cooperatives with cheap loans. At the initiative of Prussia’s finance minister, Johannes Miquel, the Preußische Zentralgenossenschaftskasse – also known as the Preußenkasse – was set up along the lines of the Reichsbank and was furnished with capital by the state. It started business in Berlin in 1895 and worked with the regional central institutions, e.g. the Landwirtschaftliche Genossenschaftsbank in Darmstadt. As early as 1889 the amended Cooperatives Act allowed for the first time the establishment of limited-liability cooperatives. The new legal framework and the provision of cheap loans unleashed a wave of start-ups in the cooperative sector. Between 1895 and 1900 the number of cooperative banks in Prussia more than doubled. New central or association institutions also emerged at the regional level, allowing the cooperatives access to the cheap loans furnished by the Preußenkasse.

A second commercial cooperative organisation
Towards the end on the nineteenth century, the painter Karl Korthaus advocated the creation of commercial cooperatives and cooperative craftsmen’s credit associations allowing access to the cheap loans extended by the Preußenkasse. He was the initiator of the central association of German commercial cooperatives. The establishment of this second commercial association in Osnabruck in 1901 also led to a deep rift in the commercial cooperative system.

COMPLEX ORGANISATION 1903

Four national associations
The cooperative organisation was thus heavily fragmented: there were the four big central associations of Schulze-Delitzsch, Raiffeisen, Haas and Korthaus. Four national organisations also competed as central institutions. While the Soergelbank and the Landwirtschaftliche Zentral-Darlehnskasse collaborated directly with the local cooperative banks, the Preußenkasse and the Reichsgenossenschaftsbank worked mainly with the regional central institutions. The growth of the cooperative movement was now unstoppable – despite the fact that it was split up into an increasing number of organisations: by 1903 there were more than 12,000 local cooperative banks with around three million members.

DEUTSCHER GENOSSENSCHAFTSVERBAND 1920.

Difficult times
The growing number of commercial central institutions conducting banking business with the Preußenkasse eroded the Soergelbank’s business base. In addition, many credit unions accused Soergelbank of having developed into a big bank. In order to broaden its earnings base the bank had increasingly conducted business outside its cooperative framework – and had incurred heavy losses. In 1904 this forced it to merge with Dresdner Bank. From then on, the central institution function for the credit unions was taken over by the special cooperative departments in Berlin and Frankfurt am Main. A few years later, the central institutions founded by Haas also got into financial difficulties. In 1912 over-indebtedness forced the Reichsgenossenschaftsbank into silent liquidation. When its associate Landwirtschaftliche Genossenschaftsbank in Darmstadt suffered the same fate in 1913, a successor bank was established: the “Zentralkasse der hessischen landwirtschaftlichen Genossenschaften”.

Deutscher Genossenschaftsverband
After the World War I there was a rapprochement between the positions of the two commercial cooperative associations of Schultze-Delitzsch and Korthaus. The Allgemeine Verband, for example, was no longer opposed to limited liability for cooperatives. In addition, the pressure to consolidate was increased by the repercussions of the lost war. The Allgemeine Verband and the central association shared common interests, leading to their merger in April 1920. The Allgemeine Verband absorbed the central association and changed its name to “Deutscher Genossenschaftsverband,” encompassing all urban commercial cooperatives. The local cooperative banks were now able to decide freely whether they wanted to work with a cooperative department of Dresdner Bank or with one of the regional central institutions associated with the Preußenkasse.

FRANKFURT COOPERATIVE PACT 1929.

Emergency programme against agricultural crisis
The agricultural crisis that started in the nineteen twenties led to the amalgamation of Raiffeisen’s Generalverband and Haas’ Reichsverband. In spring 1928 the German central government set up an emergency programme to combat the agricultural crisis. Substantial funds were funnelled through the Preußenkasse and the Deutsche Reichsbank-Kreditanstalt to restructure agriculture and consolidate the rural cooperative system. The president of the Preußenkasse, Otto Klepper, took on the role of intermediary between the Generalverband, the Reichsverband and various cooperative splinter groups.

The world’s largest cooperative organisation
On 19 July 1929 the “Frankfurt Cooperative Pact” brought agreement. Under pressure from the Preußenkasse, one year later the agricultural cooperatives’ associations  merged to form the “Reichsverband der deutschen landwirtschaftlichen Genossenschaften - Raiffeisen - e.V.”. This comprised 36,000 cooperatives and four million individual members and was thus also the largest of its kind worldwide. The former minister Andreas Hermes and the vice president of the Reichsverband, Ludwig Hohenegg, joined the board of the new Reichsverband. The Deutsche Raiffeisenbank was wound up after its losses had been settled. Its banking business was transferred to regional central institutions. The Frankfurt Cooperatives Pact was a milestone on the road to a joint cooperative organisation.  

BEFORE AND DURING THE WAR (1933 TO 1945).

The cooperative idea falls into the wrong hands
The “Gleichschaltung” or “forcible coordination” of the rural cooperatives began shortly after the NSDAP seized power. Members of the Boards of Managing Directors and Supervisory Boards were replaced by successors who towed the party line – as an opponent of National Socialism Andreas Hermes retained his position as president only briefly and resigned after his arrest on flimsy charges. His successor was the Chairman of the Reichsführergemeinschaft”, Walter Darré. Nothing now stood in the way of the association’s incorporation in the “Reichsnährstand”. As a result of the influence exerted by the NSDAP, little trace was left of fundamental cooperative principles such as voluntary participation, independent initiative or democratic self-determination. The local cooperative banks were exploited as central pools for collecting the funds needed for Germany’s military build-up.

“Gleichschaltung” at the credit unions, too
When the Nazis seized power Karl Korthaus belonged to the managing board of the Deutsche Genossenschaftsverband. In contrast to Hermes, Korthaus backed the still young National Socialist movement and before his death in 1993 experienced the “Gleichschaltung” of the Genossenschaftsverband. Political functionaries moved into the board rooms and abolished democratically elected bodies.

Deutschlandkasse the sole central credit institution
The Preußenkasse was renamed “Deutsche Zentralgenossenschaftskasse” in 1932. At this time, Dresdner Bank was attempting to push through a realignment of the central institution function for the credit unions – but unsuccessfully. However, the central government finally imposed an agreement in 1939. Dresdner Bank received compensation to wind up its cooperative departments and transfer their activities to the Deutschlandkasse, which thus positioned itself as the sole central credit institution in a three-tier banking system. After the outbreak of war the banks lacked qualified personnel. The war machine devoured immense resources, leading to a shortage of goods. Citizens were obliged to save an increasing part of their income. At the same time, investment in the small trades segment and in agriculture ground to a halt and demand for credit collapsed. The flood of deposits reached the Deutschlandkasse through the regional central institutions. Since the central institution also had scant lending opportunities, the funds were invested almost entirely in Reichsanleihen (German government bonds).

End of the war
Towards the end of the war many bank buildings and account records fell victim to the bombing attacks. The previous president of the Reichsverband, Andreas Hermes, was arrested in connection with the failed attempt on Hitler’s life and sentenced to death. Shortly before Berlin fell, Hermes managed to escape from death row and after the end of the war played an active part in establishing the Deutsche Raiffeisenverband in Bonn.

The Deutsche Genossenschaftskasse
The Deutschlandkasse lost not only its headquarters, which were located in East Berlin, but also virtually all its banking assets, which consisted almost exclusively of practically worthless bonds issued by the Third Reich. For this reason, it was decided to set up a successor bank, the Deutsche Genossenschaftskasse (DGK) in Frankfurt am Main. This created an important prerequisite for the cooperative banks’ successful development in West Germany. The new central institution was founded in 1949 with Andreas Hermes playing a crucial role in its establishment with his political and economic influence.

Separate development in East and West
The introduction of the Social Market Economy allowed the reconstruction of independent cooperatives based on voluntary mutual help and democratic decision-making. But in the planned economy pertaining in the Soviet Occupation Zone the cooperatives lost their characteristic features. While the planned economy left the local cooperative banks in the German Democratic Republic little scope for development, the local and agricultural credit cooperatives in the Federal Republic of Germany benefited from the Economic Miracle. The number of cooperative members grew rapidly and the cooperative sector was able to increase its market share.

In 1967 the Federal Supervisory Authority abolished the interest rate peg that had existed since the nineteen thirties. Competition with the saving banks and other banks increased, prompting central institutions and local cooperative banks to form larger units. Often, however, the separate organisations of the rural and urban cooperative banks stood in the way of mergers. At the end of the nineteen-sixties the Raiffeisenverband (Raiffeisen Association) and the German Cooperative Association began merger negotiations that finally led to a comprehensive reorganisation of the cooperative associations in 1972. The first joint national association for the rural and urban cooperative banks was then created in the guise of the Bonn-based Federal Association of German Cooperative Banks (BVR).
This re-organisation went hand in hand with a comprehensive process of amalgamation between the Raiffeisen organisation and the commercial cooperative organisation. Many local cooperative banks merged. At the regional level most auditing associations and all central institutions merged. Competition within the cooperative system was gradually reduced.

DG BANK Act
The DG BANK Deutsche Genossenschaftsbank Act of 1975 renamed the Deutsche Genossenschaftskasse and extended its banking purview. As of immediately the bank was licensed to run branches in Germany and abroad. As early as 1976 DG BANK opened its first international offices in New York and Hong Kong. What was more important, however, was that it was able to take over the business of regional central institutes and continue it in its branch offices. Later, DG BANK developed increasingly in the direction of a central institution based on cooperative mutual help. This transformation culminated in the privatisation of DG BANK 1998. The bank was transformed into a joint stock company. The remaining capital share held by the Federal Republic of Germany was acquired by the cooperative banks.

VERBUND CONVENTION 1989

Discussion about the structure of the Verbund
When the Bayerische Raiffeisen-Zentralbank AG got into difficulties in 1985 its banking business was transferred to DG BANK. One year later Bayerische Volksbanken AG decided to transfer its banking business to DG BANK. Lively discussions about rationalisation measures and an optimum Verbund structure. Discussion focused, therefore, on the question whether the cooperative banking group would still need regional central institutions in the future, i.e. whether the cooperative financial network should be based in the future on a two- or a three-level structure. While the proponent of a two-tier structure argued with efficiency advantages, the supporters of a three-tier structure feared an excessive concentration of power at the central institution after a merger with the middle level.
In December 1989 these discussions finally led to the “Verbund Convention.” This agreement set out the structure of and cooperation between the central institutes and DG BANK. The Convention expressly allowed the co-existence of a two- and a three-tier system. In the same year Norddeutsche Genossenschaftsbank and Raiffeisen-Zentralbank Kurhessen also decided to transfer their banking business to DG BANK.

Reunification
German reunification also posed a major challenge for the cooperative organisation: this involved preparing the former GDR’s local cooperative banks to meet the requirements of the market economy. As part of a solidarity action with the new federal states, the local cooperative banks of the old federal states and DG BANK provided the necessary investment in buildings and technology. Local cooperative banks from Western and Eastern Germany entered into partnerships – with employees of Western German local cooperative banks helping their colleagues in Eastern Germany take their first steps into the market economy. In July 1990 DG BANK took over the central institution function in the new federal states.

THE MERGER THAT CREATED DZ BANK

GZ-Bank AG
The structure as a cooperative financial services network with a two-tier structure in Northern, Eastern and Southern Germany and a three-tier structure in Western and South-western Germany remained unchanged for a decade. The concentration process was not to get moving again until 2000 when SGZ-Bank and GZB-Bank merged to form GZ-Bank. These two merger partners had been created from the mergers of central institutions in South-western Germany. Among other things, SGZ-Bank continued the banking business of Landwirtschaftliche Genossenschaftsbank Darmstadt.

DZ BANK AG
In the following year GZ-Bank and DG BANK merged to form what was then Germany’s sixth-largest bank – under today’s name DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main, which had already been earmarked for the joint central institution at the beginning of the seventies. The merger brought the unification of the cooperative superstructure to its zenith.

TODAY.

We are partners
As part of the cooperative financial network with around 1,230 local cooperative banks and as one of Germany’s biggest private financial services organisations the DZ BANK Group is positioned today as an expert provider of a comprehensive range of financial products and services. In cooperation with the cooperative sector’s specialised service providers, the local cooperative banks look after around thirty million customers nation-wide.

DZ BANK AG – central institution, corporate bank and holding company.
First of all, we are a central institution for the local cooperative banks. In our function as a corporate bank for SMEs and large companies as well as for institutional investors we offer the complete portfolio of an internationally-oriented financial institution. As a financial services and products holding we coordinate the activities of the DZ BANK Group and its cooperative sector’s specialised service providers in order to reap synergies and bring tailor-made products to market. Companies belonging to the DZ BANK Group include Bausparkasse Schwäbisch Hall, the Union Investment Group, R+V Versicherung, VR LEASING and TeamBank with “easyCredit.”

The group’s strengths
We at DZ BANK AG also benefit from the strengths of the DZ BANK Group. Its excellent market position, its expertise as a “bank for banks,” the advantages of a completely integrated organisation structure and one of the best ratings in the German banking sector give us the support we need for our business.

Art partner
As a long-standing “art partner” we shall cooperate in future with the Städel Art Museum in Frankfurt. On the occasion of our 125th jubilee we shall be donating over 210 high-quality works from our comprehensive collection of contemporary photography to the art museum on the river Main.

Tomorrow.

Achieving more together
It is more relevant than ever: the cooperative idea. For around 150 years now it has been making a contribution to promoting the economic interests of the members of cooperatives – and today it serves as a basis for our cooperative financial network’s future-oriented strategies. Its history is described in detail here. Its future lies in our hands. Tomorrow, too, we shall continue to pursue our goals on the basis of fundamental cooperative principles and we shall achieve them through our combined strengths.

Strengthened into the future
The concept has proven its mettle and it has all necessary prerequisites to master all future challenges, too: regionally organised companies with decentralised solutions-know-how make innovative contributions here to dealing with social and economic change. That which has held us together for more than a century also provides sound bearings with which to meet the challenges of the twenty-first century.

The world is on the move
The trend-researchers agree: today’s classic family is different. Single households dominate the property market. Health-awareness is increasing. But above all our society is undergoing a far-reaching shift in attitudes due to demographical change and global ways of thinking. An ever greater number of people recognises the increasing possibilities for comparing prices and products – including across frontiers.
All these developments are having a crucial influence on the banking and financial markets. For us this means acting fast and offering convincing and innovative products.

Bank as a partner for life
An important aspect is the increasing relevance of private old age pension provision and the advisory services associated with it. In the future, banks need to see themselves as a supportive partner if they are to retain customer loyalty over the long term. Providing a broader offering of flexible providential concepts through attractive business start-up loans up to and including new financial products and services and leasing products for companies is just one of the challenges the financial world has to meet.