Clinging to the dear old hausbank. (traditional financing dominates Germany's capital markets, despite deregulation)

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Clinging to the dear old hausbank. (traditional financing dominates Germany's capital markets, despite deregulation)

Since the partial deregulation of the German capital markets six months ago, investment bankers from the US, Japan and the UK have been busy trying to sell their products in Germany.

Not only foreigners, but German financial institutions trying to provide new services, have found it hard. The German banks continue to dominate German corporate finance, and will be very hard to budge.

It's not just a matter of the banks' extensive shareholdings in German industry or the bankers on the companies' supervisory boards - issues that have recently been raised in the German Press - but also of long-standing relationships and a conservative attitude of many corporate treasurers, an attitude bolstered by their businesses' prosperity. Since deregulation, it has been mainly foreign Deutschemark fund-raisers who have been trying out new ideas.

Take Euro-commercial paper and Euronote facilities. So far, only seven West German companies have launched facilities. Many do not believe this source of short-term funding can produce lower costs than more traditional bank lending sources. One of the few chief financial officers in favour of Eurocommercial paper is Manfred Klein, director in charge of finance at Metallgeselischaft, West Germany's 27th largest company in terms of turnover.

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