LB, which is already a joint-stock company, but two groups of Sparkassen would still own most of the bank.

ECONOMIST: German public-sector banks: Slow progress | The

DSGV, opposes the vertical integration of Sparkassen and Landesbanken that this implies.

ECONOMIST: German banks

Germany's locally owned savings banks (or Sparkassen), co-operative banks and small regional banks seem still to be lending furiously to their local clients.

ECONOMIST: Germany's looming credit crunch

Quite a few have tapped the Sparkassen for financial support.

ECONOMIST: German public-sector banks: Slow progress | The

LBBW's chief executive, believes that the provision of liquidity by Landesbanken to their local Sparkassen should be regarded as similar to the activities of a central bank, and thus enjoy a zero risk weight.

ECONOMIST: German public-sector banks: Slow progress | The

The 537 Sparkassen (savings banks), mainly owned by municipalities, and the 12 Landesbanken, regional banks owned by state governments and savings-banks associations, account for 39% of domestic retail and corporate deposits and 35% of bank lending.

ECONOMIST: German banks