Colloquially, credit institutions are equated with banks and savings banks. The only correct thing is that banks and savings banks can also be credit institutions. From a legal point of view, the reverse is not so easy. Unlike banks and savings banks, credit institutions can operate in various legal forms.
Credit institutions can be founded in various legal forms
A credit institution is either a legal entity under public law or operates as a company under private law. Credit institutions that operate as legal entities are public limited companies, European public limited companies, limited partnerships or limited liability companies. Credit institutions can also operate as registered cooperatives (eG) or as limited partnerships on shares. As a company under private law, a credit institution bears, for example, the company name OHG, KG or GmbH & Co. KG. The legal forms not only allow consumers to recognize the corporate form of the credit institution. The liability that the credit institution assumes in the event of payment difficulties or even bankruptcy can also be seen from the company name.
Credit institutions maintain a company’s cash and capital flows
No goods or goods are produced, processed or sold in the business areas of the credit institutions. The tasks of a credit institution are therefore divided into cashless cash transactions and the maintenance of a company’s cash and capital flows. The tasks include processing securities and issues on the stock exchanges, providing companies and private individuals with loans and loans, accepting interest-bearing deposits from savers and investors, and processing payment transactions. A credit institution also undertakes to secure the savings deposits of its customers.
The objectives of the credit institutions are different
Credit institutions show another difference by their business purpose. A commercial credit institution is interested in generating high profits. The profits are distributed to the owners of the institute. In addition to their salaries, managers receive high commissions for good business results. Cooperatives distribute generated profits to their partners. The more shares in the bank are held, the higher the profit. Savings banks and banks are often non-profit organizations and distribute their surpluses to social institutions after securing or increasing equity.