A savings bank is a financial institution that is not run on a profit-maximizing basis, and whose original or primary purpose is collecting deposits on savings accounts that are invested on a low-risk basis and receive interest. Savings banks have mostly existed as a separate category in Europe.
Savings banks originated in late-18th century Europe as a development of the Enlightenment, and became a Europe-wide phenomenon in the first half of the 19th century. The trajectories of savings bank systems then diverged across European nations, variously leading to the formation of integrated banking groups, cohesive national networks, conversion into cooperative banking or commercial banking entities, and/or piecemeal consolidation with other credit institutions. In most countries, the surviving savings banks have private-sector status and no longer operate under a distinctive legislative framework; significant exceptions include Germany and Luxembourg, where savings banks are public-sector entities.
Naming In many European languages, savings banks are referred to by a word that differentiates them from banks (, , , , ) and denotes their more restricted scope of activity, sometimes translated as "fund". That word has no direct equivalent in English; its etymology is identical with that of cash and it originally referred to a cash box, then a cash register.
Overview The origin of savings banks lies in liberal and philanthropic aspirations that motivated their promoters to create non-profit establishments aimed at promoting a culture of thrift and financial prudence among the lower classes, and using savings and the logic of compound interest as an incentive to think beyond short-term living horizons. In France, savings banks projects started to emerge in the 1750s and multiplied during the French Revolution but with no lasting success. Liberal luminaries including Adam Smith, Thomas Robert Malthus and Jean-Baptiste Say took interest in the economic and social role of savings.
The oldest lasting savings bank is widely recognized to have been the established in Hamburg in 1778, followed by other endeavors in Germany and Switzerland in the late 18th century. Savings banks mushroomed in the early 19th century, with landmark establishments in Göttingen (1801, first municipal savings bank), Ruthwell, Scotland (1810, first in the United Kingdom), Boston (1816, first in the United States), Paris (1818, first in France), and Vienna (1819, first in the Austrian Empire). Even so, origin stories of the savings bank concept were long disputed. In 1914, the New Student's Reference Work said of the origins of savings banks:
The original function of savings banks to service consumers was limited to savings, not borrowing, a foundational difference with cooperative banking which started developing a bit later during the 19th century. Savings banks were typically heavily regulated and supervised by local or national governments, and restricted to invest only in government debt or other instruments deemed of low financial risk. Over time, however, these distinctions have tended to erode, and over the 20th century the regulatory framework and business model of savings banks has largely converged with those of commercial banks, albeit with significant variations across jurisdictions.
Starting in 1861 with the establishment of the British Post Office Savings Bank, savings banks were increasingly subject to competition from postal savings systems which similarly collected retail savings and invested them in safe government securities, albeit with variations across countries; some of the postal banks have themselves been called "savings banks", e.g. the Rijkspostspaarbank in the Netherlands (est. 1881), the Caisse Nationale d'Épargne in France (est. 1882), the Austrian Postsparkasse and Hungarian Postal Savings Bank in Austria-Hungary (est. 1882 and 1886 respectively), the People's Own Savings Bank in Zimbabwe (est. 1904, renamed in 1999), the Government Savings Bank in Thailand (est. 1913), the Caisse d'Épargne de Madagascar (est. 1918), and the National Savings Bank in Sri Lanka (est. 1971), and the Postal Savings Bank of China (est. 2007).
After a long period of relative stability, including through two world wars and the European banking crisis of 1931 during which they were comparatively less affected than commercial banks, the savings banks came under increasing competitive pressure during the interest rate turmoil of the 1970s and underwent significant transformation and restructuring in many jurisdictions during the last quarter of the 20th century. By the early 21st century, savings banks were most significant in Germany and Spain, and to a lesser extent in Austria.
In Communist banking systems during the 20th century, monopolistic national retail banking networks were often labeled as savings banks. The label survives in the names of several significant Central and Eastern European commercial banks such as DSK Bank in Bulgaria, Česká spořitelna in Czechia, OTP Bank in Hungary, PKO Bank Polski in Poland, Sberbank in Russia, Slovenská sporiteľňa in Slovakia, and Oschadbank in Ukraine. Other non-European banks (other than postal savings systems or their successors) similarly named include the Botswana Savings Bank and in Sudan.
By country By chronological order of inception (not including postal savings systems): Germany: while the , est. 1778 in Hamburg, was a philanthropic endeavor, the dominant model for German savings banks has been sponsorship by local government, starting in Göttingen in 1801. In the early 20th century, savings banks created regional clearing entities, later known as Landesbanks, soon followed by the national Deutsche Girozentrale (est. 1918). The German savings banks sector is currently operating as a group with some centralized functions but decentralized organization, the Sparkassen-Finanzgruppe which relies on a group-wide institutional protection scheme. Switzerland: an early savings bank () was established in Bern in 1787. The oldest one still extant is Sparkasse Schwyz (est. 1812). As of 2022, there were 59 forming a decentralized network. United Kingdom: the Ruthwell Savings Bank (est. 1810) is often referred to as the first British savings bank, with competing claims about the Tottenham Female Benefit Club and Children's Bank (est. 1798 by philanthropist Priscilla Wakefield) and the Edinburgh Bank for Savings (est. 1814). In the 1970s and 1980s, surviving British savings banks consolidated into the Trustee Savings Bank, which merged with Lloyds Bank in 1995, was again spun off as TSB Bank in 2013, and was acquired by Spain's Banco Sabadell in 2015. Denmark: Holsteinsborg Saving Bank was established in 1810 in Skælskør. The Danish savings banks established a common national entity, the , in 1949. Their number declined from over 500 in the 1930s to a bit above 100 by the late 1980s. In 1986-1991, Fællesbanken was dismantled and its components acquired respectively by Hafnia Insurance, Sydbank and Sparekassen Bikuben, the latter a major savings bank that was eventually merged into Danske Bank in 2000. The other major savings bank, , merged in 1990 into what in 2000 became Nordea. The remaining savings banks in 1993 joined other smaller Danish commercial and cooperative banks to form a single association of Local Banks, Savings Banks and Cooperative Banks in Denmark, or . Ireland: the first Irish trustee savings bank was founded in Waterford in 1816. By 1992, the trustee savings banks of Waterford and others in Cork, Dublin, Monaghan and Limerick had consolidated into TSB Bank, which was acquired in 2001 by Irish Life and Permanent and rebranded Permanent TSB. United States: mutual savings banks started with the Provident Institution for Savings in the Town of Boston (est. 1816), and were heavily concentrated in the Northeastern United States. They were decimated at the start of the savings and loan crisis in the early 1980s, and more mutual savings banks failed later in the 1980s and 1990s while other converted to joint-stock status. As of 2024, the oldest surviving mutual savings bank is Liberty Bank, established 1825 as Middletown Savings Bank. Federal savings banks are savings banks chartered at the federal level. Netherlands: the first Dutch savings bank () was established in 1817 in Workum; 1848 saw the creation of the . In 1907, the savings banks started to operate as a national network (). In 1979-1983 the largest Dutch savings banks merged to form which in the 1990s became a founding component of Fortis Group, itself dismantled in 2008 with the Dutch operations absorbed into ABN AMRO. Other savings banks merged into SNS Bank (for , ), later nationalized and renamed De Volksbank in 2017. France: following the Caisse d'Épargne de Paris (est. 1818), non-profit private-sector savings banks were created in numerous French towns and cities, and started developing a national organization of their own in the 1980s and 1990s. By legislation of 1999, the Groupe Caisse d'Épargne was converted into a cooperative banking group, which in 2009 merged with another cooperative group, Groupe Banque Populaire, to form Groupe BPCE. Austria: following the 1819 establishment of Erste Bank in Vienna, Austrian savings banks have developed first as philanthropic associations and later as local government-sponsored entities. The 1980s and 1990s saw multiple rounds of reform and the departure from the network of the largest savings bank, Vienna's Zentralsparkasse, which eventually became part of UniCredit. As a result of these changes, the Sparkassengruppe Österreich operates largely as a single commercial banking group (and is supervised as such under European Banking Supervision), with Erste Group Bank as its central entity. Slovenia: the Carniolan Savings Bank was established in 1820 (originally as Laibacher Sparkasse) and remained the only financial institution in what is now Slovenia until the 1860s. More municipal savings banks were subsequently established, including the in 1889. Sweden: the first Swedish savings bank was established in 1820 in Gothenburg. During the Sweden financial crisis 1990–1994, a number of them merged in 1992 to form a commercial banking group that has been branded Swedbank since 2006. Dozens of other savings banks survive, such as Westra Wermlands Sparbank in Värmland County (est. 1856). Italy: starting with Cassa di Risparmio di Venezia (est. 1822), a number of savings banks () were established in the Italian parts of the Austrian Empire, followed by establishments in other Italian polities and after the unification of Italy. Italian savings banks never coalesced in a national network or group. In 1990, the legislation known as led to their conversion into joint-stock companies, with independent banking foundations as shareholders. This triggered significant consolidation in the 1990s and 2000s into larger commercial banking groups. For example, the savings banks of Rimini (est. 1840), La Spezia (1842), Parma (1859), and Piacenza (1860) have become part of Crédit Agricole Italia; those of Venice and Padua (1822), Milan (1823), Florence (1829), Prato (1830), Gorizia and Pistoia (1831), Spoleto (1836), Bologna (1837), Forlì (1839), Ascoli Piceno (1842), Civitavecchia (1847), Cuneo and Viterbo (1855), Foligno (1857), Calabria (1861), and (1949) have become part of Intesa Sanpaolo; those of Pisa (1834), Lucca (1835), Livorno (1836), and Alessandria (1838), have become part of Banco BPM; those of Ferrara (1838), Genoa (1846), and L'Aquila (1859) have become part of BPER Banca; and those of Verona (1825), Turin (1827), Rome (1836), Trieste (1842), Modena (1846), Reggio Emilia (1852), Sicily (1861), Treviso (1907), and Perugia (1908) have become part of UniCredit. As of early 2024, a few savings banks still exist as independent entities in Asti, Bolzano, Cento, Fermo, Fossano, Ravenna, Savigliano, and Volterra.