The society will operate as Europaische Bausparkasse (European Building Society), based in Hamburg. Final approval has still to come from the German supervisory authorities, but no difficulties are expected.
John Smith, finance director, said the society had been looking at possibilities in Europe for some time, and Germany was the most attractive market.
With only 38 per cent of the population owning homes in western Germany against 70 per cent in the UK, Mr Smith said the market had much room for growth. The German system of fixed rates for lenders and savers was attractive to both sides and avoided the sort of crisis seen in the British housing market, brought about by sharply moving flexible interest rates.
He said the society had already established links with a number of large distributors who had agreed to diversify some of their existing business to Europaische Bausparkasse. There are a number of life insurers in Germany who do not yet have links to one of the existing 34 bausparkassen and are eager to broaden their business.
German societies are sceptical, however, of what innovations the future British competitor can bring. 'In the past we have already pushed through everything that is legally do-able,' said Helmut Nietzer, chairman of the association of private bausparkassen. The only vulnerable point would be if Bradford and Bingley could introduce significantly lower sales costs.Reuse content