KfW Bankengruppe - 60 Years of Promotion of the German and European Economy

Frankfurt (ots) - 18 November 1948: entry into force of the Law
Concerning KfW Promotional loans totalling nearly one trillion euros
awarded since its foundation Promotional programmes now financed to
94 per cent with capital market funds

Exactly 60 years ago to the day, on 18 November 1948, the Law
Con-cerning KfW (KfW Law) took effect, paving the way for the
long-term support of the German economy. Shortly afterwards KfW
Bankengruppe, at the time still referred to by its old name of
Kreditanstalt für Wiederaufbau, took up its promotional business.
Since then, time after time important driving forces have been
reinforced and new, promising developments have been initiated - in
the economy, but also in society. "From the beginning KfW was more
than simply a "channelling institution" for foreign donor funds.
After the war it was the first bank to be incorporated under public
law by German legislators and assigned a myriad of tasks. KfW's
history is closely interwoven with the economic development of the
Federal Republic of Germany. What is more, its establishment in
Frankfurt was the trigger for the further development of Frankfurt as
a financial location", explained Dr Ulrich Schröder, CEO of KfW
Bankengruppe. "In the future, too, KfW will continue to play a role
in forming the economy and society in conjunction with its official
mission to provide support. Especially in difficult economic times
such as the ones we are currently experiencing, there is a
particularly strong need for a promotional bank like KfW to boost the
economy and the country's financial centre. On this day I
particularly thank all those former and current employ-ees of KfW who
have contributed so much to enabling us to successfully perform our
promotional mandate".

Practically from the outset the promotional mandate assigned to
KfW Bankengruppe, which today also includes KfW IPEX-Bank - spun off
into an independent subsidiary as at 1 January 2008 - and, since
2001, Deutsche Investitions- und Entwicklungsgesellschaft (DEG), went
beyond the borders of the Federal Republic. After its merger with the
Staatsbank Berlin (in 1994) and Deutsche Ausgleichsbank (in 2003),
KfW has become Europe's largest promotional bank by far - and serves
as a model for many other promotional banks all over the globe. Today
KfW Bankengruppe employs 3800 staff altogether and its balance sheet
total adds up to EUR 354 billion (2007).

During the six decades of the bank's existence, the overall
economic and social conditions have changed - and with them KfW's
organisational structure and promotional tasks. Today the bank grants
favourable loans to small and medium-sized enterprises, supports
infrastructure and home construction, and advances climate
protection. Its core tasks also encompass export finance and German
Financial Cooperation with developing and industrialising countries.
A comparatively new but increasingly important future field is
education finance.

Whereas at the beginning KfW financed its promotional activities
almost completely with public funds, today it refinances its
promotional volume to 94 per cent with capital market funds. A mere
six per cent come from the federal budget. Last year the bank's
promotional volume attained EUR 87.1 billion - the largest in its
60-year history. Since its foundation KfW has granted nearly one
trillion euros (at the current conversion rate) in loans in some 30
different currencies within Germany and throughout the world.

KfW's early days are closely associated with the Marshall Plan
(European Recovery Programme, or ERP) for the reconstruction of
Europe. The bank, endowed with equity of one million deutschmarks and
Marshall Plan funds, was to support the reconstruction of the German
economy. Given the housing shortage, in the post-war era the
construction of hou-sing was the top promotional priority. Housing
finance reemerged as a key promotional area after German unification
in the early 1990s. Already by 1997 around 3.2 million apartments had
been modernised in the new federal states with KfW's help. Today
homebuilding finance is closely tied to the promotion of climate
protection: at over EUR 14.6 billion, financing for housing
investments accounts for a good 42 per cent of all promotional loans
extended by KfW Förderbank.

SME finance became important in the 1970s, when the first major
ener-gy crisis caused economic distortions all over the globe. The
experience collected during the structural shift of the economy over
the two decades that followed became useful in the post-unification
reconstruction efforts. 99 per cent of all enterprises in eastern
Germany are currently small or mid-sized. Simultaneously, KfW's range
of promotional instruments is continuously adapted to changing
conditions. Innovative instruments such as asset securitisation, for
instance, are further developed in order to improve the overall
conditions for SME finance.

With its "Small SMEs" initiative KfW is also helping to improve
the finan-cing situation of small and micro businesses. Approximately
one out of every five euros provided to the business sector in the
form of a KfW loan is granted to an SME - totalling over EUR 13.2
billion in 2007.

KfW's activities that it conducts in other countries on behalf of
the Ger-man Government have increased since the beginning of the
1960s. The focus of development support, once on large-scale
infrastructure projects in the form of capital assistance for
developing countries, shifted towards direct poverty reduction
measures as of 1970. These days more is being asked of the developing
countries: a counterpart contribution, greater willingness to reform
and also good governance. To sustainably improve conditions for the
people in developing countries, KfW increa-singly adds funds of its
own: last year 57 per cent of commitments were financed with funds
raised in the capital market.

One of KfW's oldest business areas is export and project finance,
with roots tracing back to the 1950s. At that time, the export of
industrial in-stallations was extremely important economically and
worthy of support. Since the 1980s KfW has been increasing the share
of capital market funds in its export finance operations. The
revenues from these activities were and still are an effective and
sustainable source of support for the promotional business of KfW
Bankengruppe throughout Germany. A separation of promotional and
competitive business as required by Brussels in 2003 led to the
spin-off of export and project finance into an independent subsidiary
- KfW IPEX-Bank, which launched its operations on 1 January 2008.

KfW was the first German promotional institution to finance
ecological protection measures in the water and agricultural sectors
as early as the 1950s and 1960s. Back then, no one explicitly talked
about environmental protection, as the prime focus was on reversing
ecological damage in the municipal sector. When environmental
awareness started growing in the 1980s, KfW's environmental
programmes began to attract busines-ses as well. After unification
KfW provided considerable funds specifically to remedy the
environmental damage in the chemical and lignite mi-ning districts in
the new Länder. Today one main focus of KfW's envi-ronmental and
climate protection finance is on housing construction. The
promotional initiative targeting energy-saving rehabilitation
measures that KfW launched in the housing sector in 2006 enabled it
to reach out to a broad audience of private homeowners on the lookout
for finance - and 1.6 million tonnes of CO2 emissions p.a. were able
to be reduced permanently solely through the investments sparked in
2006 and 2007 under its energy and climate protection programmes.

The fact that Germany has been playing a leading role in climate
policy for many years can, in part, be credited to a visionary
strategy that has been pursued in the field of environmental
protection from an early stage. Today KfW is one of the key
financiers of renewable energies, both within Germany and abroad.
Germany's "number one environmental bank" invests around 20 per cent
of its overall financing volume in national and international climate
projects.

For more about KfW's history see www.kfw.de / About KfW
Banken-gruppe / Our History.

Originaltext: KfW
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Pressekontakt:
For further information:
Dr. Charis Pöthig
Tel.: +49 (0) 69 7431-4683
E-Mail: charis.poethig@kfw.de

KfW, Palmengartenstraße 5-9, 60325 Frankfurt
Kommunikation (KOM)
Tel. 069 7431-4400, Fax: 069 7431-3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de