Germany - Country Commercial Guide
Trade Financing
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Methods of Payment

Most import transactions by German customers, especially those involving large German distributors, take place under seller-buyer terms, such as the common 30/60/90-day accounts, or payment against documents. The electronic funds transfer (EFT, equivalent to SWIFT or wire transfers) is the most popular payment mechanism by which German importers remit payment to their U.S. suppliers and is the fastest and cheapest way to transfer funds. Current technology makes online transfers reasonably secure and transparent.

The letter of credit is still used in some industry sectors but now covers a fraction of total imports, largely due to its cost and time requirements as well as the ease in obtaining credit ratings in Germany, which increases transparency and transactional safety. L/C’s for payments under USD 5,000 are almost unknown in Germany. U.S. exporters may also encounter Bills of Exchange (Wechsel), usually payable within two or three months, however this antiquated payment mechanism is also passing from the scene. Cash-in-advance is also rare in German import payment.

Both private and public credit insurance are available in Germany. Euler Hermes (German), Coface (French) and Atradius (Dutch) are among the private providers (which also offer ranking and scoring services), and the main public insurer is the Staatliche Kreditversicherung (Hermes-Bürgschaften), which is administered by Euler Hermes and is used to cover German exports to countries with high political and country risk.

Overall, German firms continue to enjoy a relatively good reputation for their payment practices and management of credit. However, default risks in Germany vary from region to region and industry to industry. The U.S. Commercial Service Germany offers the International Company Profile as a tool to help evaluate the creditworthiness of potential customers or partners and recommends that U.S. exporters consider normal, prudent credit practices in Germany in all transactions.

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. The Ex-Im Bank’s mission is to assist in financing exports of U.S. goods and services to international markets. The Ex-Im Bank enables U.S. companies – large and small – to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy. The Ex-Im Bank does not compete with private-sector lenders but instead provides export-financing products that fill gaps in trade financing. The bank assumes credit and country risks the private sector is unable or unwilling to accept and helps level the playing field for U.S. firms by matching the financing that other governments provide to their exporters. The Ex-Im Bank provides working capital guarantees (pre-export financing), export credit insurance, loan guarantees, and direct loans (buyer financing), primarily focusing on developing markets worldwide.

For more information about the methods of payment or other trade finance options, please read the  Trade Finance Guide.

Banking Systems

Germany has a non-discriminatory, well-developed financial services infrastructure. Although corporate financing via capital markets is on the rise, Germany’s financial system remains mostly bank-based, with bank loans serving as the predominant form of funding for firms, particularly the small- and medium-sized enterprises of Germany’s famed Mittelstand.

Germany’s universal banking system allows the country’s more than 1,679 banks and savings banks and total network of 25,800 branches to take deposits and make loans to customers as well as to trade in securities. There are no reports of a shortage of credit in the German economy. Credit is available at market-determined rates to both domestic and foreign investors, and a variety of credit instruments are available. The traditional German system of cross-shareholding among banks and industry, as well as a high rate of bank borrowing relative to equity financing, allowed German banks to exert substantial influence on industry in the past.

Key Link: The German Bankers’ Association  
Key Link: Federal Financial Supervisory Authority  

Germany has a modern banking sector, but it is considered “over-banked,” as evidenced by ongoing consolidation and low profit margins. The country’s so-called “three-pillar” banking system is made up of private commercial banks, cooperative banks, and public banks (savings banks or Sparkassen, and the regional state-owned banks, or Landesbanken). German banks’ profitability is increasingly under pressure given very low interest rates, high-cost structures, growing competition from FinTechs, and increasing compliance costs as a result of new regulation and supervision. German banks have seen their interest margin narrow during the negative interest rate period that began in 2014. Banks are currently discouraging customers by charging negative rates to a growing number of depositors – corporates and private retail clients alike (depending on the bank on deposits exceeding EUR 50,000 or EUR 100,000) – and have substantially increased fees for banking services and accounts to compensate for interest rate earnings losses.

Private banks control roughly 40 percent of the market, while publicly owned savings banks partially linked to state and local governments account for 50 percent of banking transactions, and cooperative banks make up the balance. All three types of banks offer a full range of services to their customers. A state-owned bank, KfW, provides special credit services, including the financing of homeowner mortgages, guarantees to small- and medium-sized businesses, financing for projects in disadvantaged regions in Germany, and export financing for projects in developing countries.

The private bank sector is dominated by the universal banks Deutsche Bank (Germany’s largest bank by balance sheet total) and Commerzbank (fourth-largest bank), with balance sheets of EUR 1.3 trillion and EUR 477.4 billion respectively (2022 figures). Commerzbank received EUR 18 billion in financial assistance from the federal government in 2009, for which the government took a 25 percent stake in the bank (now reduced to 15.6 percent). Merger talks between Deutsche Bank and Commerzbank failed in 2019. The second largest of the top ten German banks is DZ Bank, the central institution of the Cooperative Finance Group (after its merger with WGZ Bank in July 2016), followed by KfW, Commerzbank, and then LBBW grouped among German branches of large international banks (UniCredit Bank, HVB, or ING-Diba) and regional state-owned banks (LBBW, Bayern LB, Helaba, NordLB). Germany’s regional state-owned banks were among the hardest hit by the global financial crisis and continue to face major challenges to their business models. The federal government is still in the process of winding down several so-called “bad banks” composed of toxic assets of failed banks WestLB (now Portigon AG) and Hypo Real Estate. All German banks have weathered the COVID-19 pandemic well thanks to cheap central bank liquidity regulatory easing, and moratoria on corporate insolvency laws.

Most major U.S. banks are represented in the German market, principally but not exclusively in the city of Frankfurt am Main, Germany’s main financial center. Following the UK’s exit from the EU, many U.S. banks chose Frankfurt as their EU headquarters. A large number of German banks, including some of the partially state-owned regional banks, similarly maintain subsidiaries, branches, and/or representative offices in the United States.

Practices regarding finance, availability of capital, and schedules of payment are comparable to those that prevail in the United States. There are no restrictions or barriers on the movement of capital, foreign exchange earnings, or dividends.

To learn more about German financing system, access the Department of State  Investment Climate Statement website.

Foreign Exchange Controls

The German government imposes no forms of controls on the purchase or sale of foreign currencies.

U.S. Banks and Local Correspondent Banks

Bank of America
Neue Mainzer Straße 52, 60311 Frankfurt am Main, Germany 
Phone: +49 69 589910

BNY Mellon
Messe Turm, Friedrich-Ebert-Anlage 49, 60308 Frankfurt am Main, Germany 
Phone: +49 69 12014 1025

Citigroup Global Markets Germany
Reuterweg 16, 60323 Frankfurt am Main, Germany 
Phone: +49-69-1366 0

JP Morgan AG
TaunusTurm, Taunustor 1, 60310 Frankfurt am Main, Germany 
Phone: +49.69.7124.1601

Goldman Sachs
Taunusanlage 9-10, 603329, Frankfurt am Main, Germany 
Phone: +49-69-7532 1000

Morgan Stanley
Grosse Gallusstrasse 18, 60312, Frankfurt am Main, Germany 
Phone: +49-69-2166-0

Silicon Valley Bank
Guiollettstraße 48, 60325 Frankfurt am Main, Germany 
Phone: +49-69-7158-950

State Street Bank International GmbH
Solmsstraße 83, 60486 Frankfurt am Main, Germany 
Phone: +49 -69-6677-45000

Wells Fargo
An der Hauptwache 7, 60313 Frankfurt am Main, Germany 
Phone: +49-69-2980-2700