What does the three-pillar system look like? -- Three-pillar banking in Europe -- How will the phaseout of guarantees affect the public sector banks? -- Structural adaptation in the German banking system -- Summary of findings -- Appendix 1. Data sources -- Appendix 2. Gauging the market value...

German banks tend to be less profitable than their foreign counterparts. This paper estimates the likely effect of the phaseout of state guarantees for public sector banks, reviews the various ways in which public policy could contribute to their restructuring, and discusses the various...