What Is a Savings Bank?

A savings bank is much like a commercial bank in its organization but is more in line with a savings association in its form of charter and operation. What is a savings bank? Where does it come from, and what does it do? How is it governed?

Identification

A savings bank is defined as a financial institution. The primary purpose of savings banks is accepting savings deposits.

Functions

Savings banks are set up to take in deposits from individuals and invest these deposits into loans for commercial and residential real estate, much like a savings and loan association. Savings banks can also help acquire investments in government and corporate bonds.

History

European savings banks began in the late 1700s into the early 1800s; American savings banks started after. Today, European banks have kept their core business linked to the original business model; American banks have grown more to resemble commercial banks.

Origins

European savings banks originated in cities such as Brumuth, France; Hamburg, Germany; and Berne, Switzerland. The American counterparts were found in Boston; Philadelphia; Salem, Mass.; and Hartford, Conn.

Charters

Savings banks are usually chartered by national governments. In the U.S., they can also be chartered by states. After 1982, the charters for American savings banks and savings and loan associations met the same regulations for operations.

Resources

• History of Savings Banks (European)
• General Discussion of Savings Banks