Mr Kohler, until the summer the senior civil servant in charge of the finance ministry, was responding to suggestions from Gunter Rexrodt, the economics minister, that the powerful savings banks should be privatised 'as far as possible' to remove distortions of competition in banking as well as helping to fund the government deficit.
Mr Kohler said the savings banks were rooted in local markets, backing small and medium-sized industry more effectively than big national banks. They were better at helping business customers when times were hard because they knew them better.
The savings banks have 37 per cent of the German banking market compared with only 9 per cent for the three largest commercial banks, and their share of the small and medium business market is 61 per cent.
Mr Kohler said the savings banks' ability to create jobs would not be improved if this decentralised banking system were destroyed.
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