KfW celebrates 70th anniversary

Frankfurt am Main (ots) -

- Law Concerning KfW entered into force on 18 November 1948
- Institution has been witness to - and protagonist in - Germany's
development over the past seven decades
- Promotional business volume of EUR 1.7 trillion since KfW was
founded
- Today, one of the largest national promotional banks and a
heavyweight in global bond markets
- Key challenges for the future: sustainability and digital
transformation

Embracing "70 years of responsibility" as its motto, KfW is
celebrating its 70th year of existence over the coming days. The Law
Concerning KfW entered into force on 18 November 1948, giving the
starting signal that led to the development of the Kreditanstalt für
Wiederaufbau ("Reconstruction Loan Corporation") into the KfW of
today - a promotional bank with global operations, maintaining its
headquarters in Frankfurt am Main, along with branches and
subsidiaries in Berlin, Bonn, Frankfurt and Cologne, around 80
locations worldwide and more than 6,000 staff. As the self-professed
"home of responsible banking", KfW provides financing packages on
favourable terms to support companies, start-up entrepreneurs, local
authorities and private individuals. In particular, it promotes
investments into new business initiatives, innovations, environmental
protection, energy efficiency, municipal and public infrastructure,
and access to education. Its key activities also include export
promotion and financial cooperation with developing countries and
emerging economies. In 2017, KfW committed EUR 76.5 billion in
financing, achieving a balance sheet total of EUR 472.3 billion.

In advance of the anniversary, KfW's CEO, Dr Günther Bräunig,
noted: "KfW's 70th anniversary coincides with 70 years of Germany's
social market economy. KfW has borne witness and given support to
this era of economic progress. Post-war reconstruction, national
reunification, dealing with the financial crisis, supporting the
energy transition and making our contribution to reducing carbon
emissions - those have been and continue to be the epoch-making
issues that has faced KfW. The challenges have changed over the
decades, but at its core, our mission has always remained the same:
to support social and economic change, and to advance forward-looking
ideas."

While KfW initially almost exclusively used public funds for its
promotional activities, today it largely funds its promotional
business on the capital market I is one of the largest and most
active issuers of bonds worldwide, from which it refinances its
promotional activities. KfW's total promotional business volume since
its founding now stands at around EUR 1.7 trillion.

The promotional bank's origins are closely tied to the European
Recovery Program, also known as the Marshall Plan. Allocated one
million marks in equity capital and funds from the ERP, KfW was
tasked with supporting the reconstruction of the German economy. The
initial priority during the post-war period was residential
construction to end the housing shortage. Today, promotional
activities for residential construction are closely linked to those
for climate protection. Specifically, in 2017, the Energy-efficient
Construction and Refurbishment programmes accounted for EUR 14.2
billion of the EUR 18.9 billion earmarked for residential
construction investments.

Since the 1970s, the SME sector has become a focus area for KfW.
In 1971, KfW launched the first credit programme of its own, which
was refinanced exclusively from capital market funds. This
"M-Programm" offered smaller companies long-term investment loans via
bank onlending. From 1990 onwards, SME support focused on the new
states that formerly constituted East Germany. In the first eight
years after the Berlin Wall fell, 65,000 businesses in these states
received loans for their investments from KfW - a sum totalling more
than EUR 25.5 billion.

Funding instruments constantly changing to reflect market
developments

KfW's toolkit of promotional instruments has since undergone
constant adaptation. The new approaches have included awarding global
loans, promoting the private equity market and securitising SME
loans. There was a particular need for KfW to step up in 2009 and
2010, when it helped to keep access to loans open for enterprises and
to cushion the impacts of the financial crisis and recession with its
special programme (KfW-Sonderprogramm). With a EUR 13.5 billion
volume of lending, KfW made a significant contribution to the quick
recovery from the crisis in Germany.

In October 2018, KfW again responded to changing market needs by
founding KfW Capital. The new subsidiary's mission is to develop the
venture capital funding landscape in Germany and Europe, improving
access to capital for young, innovative, fast-growing German tech
companies in the start-up and growth phase. "The founding of KfW
Capital is an example of how KfW has developed a new instrument to
combine forces with private market actors and forge ahead with an
important matter for the future. Due to its independent and
market-oriented structure, KfW Capital will significantly reinforce
the ecosystem for growth financing in Germany," explained Dr Bräunig.

In addition, KfW created an Internet-based start-up platform in
early 2018 to strengthen entrepreneurial spirit and boost interest in
launching new enterprises in Germany. On this digital platform,
potential entrepreneurs receive comprehensive support throughout the
entire process of setting up and getting started with their firm.

KfW has also been increasingly involved outside of Germany since
the early 1960s. The KfW Development Bank business area finances
development projects worldwide on behalf of the German Federal
Government. Its ultimate objectives are to improve living conditions
and to protect the climate and environment. In this context, KfW
supports Germany's partner countries and provides impetus for
progress and development. DEG (Deutsche Investitions- und
Entwicklungsgesellschaft), which finances companies in developing
countries and emerging economies, has also been a part of KfW since
2011. In 2017, KfW provided a total of EUR 9.7 billion for the
promotion of developing countries and emerging economies.

Export and project finance is one of KfW's longest-standing
business areas, dating all the way back to the 1950s. Since 2008,
independent KfW subsidiary KfW IPEX-Bank has been responsible for
export and project finance.

Environmental financing as early as the 1950s

As far back as the 1950s and 1960s, KfW was the first German
promotional institution to support environmental protection measures
in water management and agriculture. As environmental consciousness
grew during the 1980s, KfW also managed to bring companies on board
as customers for its environmental protection programmes. KfW
provided substantial funding in the wake of German reunification, in
particular to eliminate damage to the environment in the chemical and
brown coal-mining regions of the new federal states in the East.
Today's promotional efforts to support environmental and climate
protection focus on residential construction, as well as energy
efficiency in businesses and the municipal sector.

Alongside its promotional activities, KfW also consistently takes
on special tasks commissioned by the Federal Government. For
instance, it assisted the Federal Government with the privatisation
of Deutsche Telekom AG and Deutsche Post AG, and holds shares in EADS
and 50Hertz on behalf of the Federal Government.

Setbacks provide initial spark for ongoing modernisation process

KfW has also had to contend with some setbacks over its 70-year
history. The ongoing existence of IKB was under threat in 2007 as a
consequence of its involvement in the US mortgage market. With KfW
holding 38% of IKB shares, its rescue resulted in substantial
financial burdens. That September, a transfer to already-insolvent
investment bank Lehman Brothers lost KfW a significant amount of its
reputation, though it was able to recover this in short order -
thanks, for instance, to its role in overcoming the financial crisis
and economic recession.

At the same time, these results were the starting point for a
modernisation process which continues to this day. Milestones along
the way have included the digitalisation of bank onlending since 2011
("BDO 2.0"), the voluntary adoption of the German Banking Act
provisions and alignment with the relevant oversight regime by the
German Federal Financial Supervisory Authority (BaFin).

Sustainability and digital transformation: key challenges for the
years ahead

With seven decades of experience under its belt, KfW today faces
two great challenges: sustainability and digital transformation. KfW
has been a leader in promoting investments in environmental and
climate protection for many years. By 2017, 43% of all its new loan
commitments were related to these areas. Today, KfW is one of the
capital market's largest issuers of green bonds (bonds that are
explicitly used to refinance investments in environmental and climate
protection). Increasingly, KfW is coordinating its involvement in
close partnership with other promotional banks. For instance, during
the 2018 Annual Meetings of the World Bank in Bali, KfW joined forces
with the European Investment Bank and Agence Française de
Développement to launch the Clean Ocean Initiative to pool and expand
the partners' activities on marine conservation.

"For KfW, the all-encompassing and consistent focus on
sustainability will be one of the major challenges in the years
ahead. For this purpose, we have embarked on an ambitious Sustainable
Finance Roadmap and we are aiming to make the United Nations' 17
Sustainable Development Goals, the Paris climate accords and the
German Federal Government's sustainable development strategy, among
other targets, an integral part of our sustainability model. In
addition, we are applying selection criteria to our financing
activities and will be reviewing which commitments to make or not to
make in the future," Dr Bräunig added.

KfW is helping the German economy to keep pace with the continuing
changes associated with the digital revolution. Dr Bräunig is calling
for stronger commitment from firms, observing that "just a quarter of
small and medium-sized businesses are investing in digital
transformation projects and they are only putting EUR 18,000 towards
these. Many companies still view digitalisation as a cost driver and
not as a foundation for new business models." For this reason, KfW is
providing targeted support to companies investing in digital
transformation via its ERP Digitalisation and Innovation Loan, which
was introduced in May 2017. In its own operations, KfW opened a
Digital Office and Innovation Lab in 2016 where new developments in
technology and the world of work are tested out and translated into
practical application in banking.

Contact:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM), Wolfram Schweickhardt
Tel. +49 (0)69 7431 1778, Fax: +49 (0)69 7431 3266,
E-Mail: Wolfram.Schweickhardt@kfw.de, Internet: www.kfw.de

Original-Content von: KfW, übermittelt durch news aktuell