Bank of Saxony
Bank of Saxony was a nineteenth-century German bank headquartered in Dresden that retained the right to issue banknotes in Saxony until 1935.
Last updated August 25, 2026
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Overview
Bank of Saxony, known in German as Sächsische Bank and formally established as Sächsische Bank zu Dresden, was a historical German banking institution founded in 1865 under a state concession. It was headquartered in Dresden and became one of the regional banks that operated within the monetary framework of the German states before and after the creation of the German Empire. The bank was established with capital of 5 million thalers. In 1869 it moved its head office to the former Hôtel de Pologne on Schloßstraße in central Dresden. The building’s façade was remodeled for the bank according to a design by architect Karl Eberhard, giving the institution a prominent civic presence in the Saxon capital. Its capital was increased by a further 5 million thalers in 1873 and was later denominated at 30 million marks. A central part of the bank’s historical importance was its note-issuing privilege. The foundation of the German Empire in 1871 reduced the individual German states’ authority over monetary legislation, but the Reichsbank legislation of 14 March 1875 did not immediately create an absolute monopoly over banknote issuance. Existing local central banks could continue issuing notes within statutory limits. After the Leipziger Bank, Chemnitzer Stadtbank, and Leipziger Kassenverein relinquished their respective note-issuing rights, Bank of Saxony became the only bank in Saxony still issuing banknotes. Its notes were legally capable of circulating throughout the German Empire. The institution also expanded beyond traditional lending and note issuance. From 1888 it offered commission-free check and giro transactions, reflecting the development of modern cashless payment services. During the 1920s, subsidiaries associated with the bank operated bus routes, in several cases taking over feeder services connected with state railway lines. This activity illustrated the broader, diversified role that some regional financial institutions played during the interwar period. The bank’s monetary role was curtailed after the hyperinflation of 1923. Under the Private Central Bank Act of 30 August 1924, its annual banknote issuance was limited to 70 million Reichsmarks, while its share capital was converted to 15 million Reichsmarks. Nazi legislation enacted on 18 November 1933 removed its right to issue banknotes with effect from 31 December 1935. In an effort to avoid immediate liquidation, Bank of Saxony cooperated with the Sächsische Staatsbank and transferred the latter’s customer business to itself on 1 January 1937. By 1945, the Sächsische Staatsbank held 80 percent of Bank of Saxony’s capital. The bank’s existence ended in the aftermath of the Second World War. In 1945, Soviet occupation authorities expropriated both Bank of Saxony and the Sächsische Staatsbank without compensation. Bank of Saxony was removed from the commercial register in 1947. Assets located in the western occupation zones and later West Germany were administered through a fiduciary entity appointed by the West German Federal Finance Minister from 1950 to 1980. Those remaining assets were ultimately liquidated and paid out by 1981. The brand is therefore a defunct historical banking institution rather than a contemporary German retail or commercial bank.
History
Bank of Saxony was created during the expansion of modern banking in the German states. Formally named Sächsische Bank zu Dresden, it received a state concession on 18 July 1865 and began with capital of 5 million thalers. The institution was based in Dresden, the capital of the Kingdom of Saxony, and was intended to provide a major regional financial institution for banking, payments, and the circulation of approved banknotes. In 1869 the bank established its head office in the former Hôtel de Pologne at Schloßstraße 7 in central Dresden. The façade was remodeled to an architectural design by Karl Eberhard. The bank’s capital was increased by 5 million thalers in 1873 and was later expressed as 30 million marks following monetary changes. Its location and architecture reflected the importance of banks as civic institutions in nineteenth-century commercial centers. The creation of the German Empire in 1871 changed the legal environment in which Saxon banking operated. The individual states no longer had the same authority over monetary legislation, but the Reichsbank, created under imperial legislation of 14 March 1875, did not immediately hold an unrestricted monopoly over banknote issuance. Existing local central banks could continue issuing notes within limits specified in the legislation. Bank of Saxony therefore remained an important regional issuer. The Leipziger Bank gave up its note-issuing role in 1875, while the Chemnitzer Stadtbank and Leipziger Kassenverein did so in 1890. As a result, Bank of Saxony became the only note-issuing institution remaining in Saxony, and its notes could circulate across the German Empire. The institution broadened its banking services in 1888 by introducing commission-free check and giro transactions. These services placed it within the gradual transition from exclusively cash-based payments toward organized account transfers and clearing arrangements. The bank was not limited entirely to finance: during the 1920s, subsidiaries operated bus routes, sometimes taking over feeder services connecting communities with state railway lines. This diversification occurred during a period in which regional banks and public institutions could be involved in infrastructure and transport activities as well as conventional banking. The hyperinflation of 1923 brought stricter controls. The Private Central Bank Act of 30 August 1924 restricted Bank of Saxony’s annual banknote issuance to a maximum of 70 million Reichsmarks. Its share capital was also converted to 15 million Reichsmarks. These changes formed part of the broader reconstruction of Germany’s monetary system after the collapse of the mark. The bank’s independence and monetary role were further reduced under the Nazi regime. Legislation enacted on 18 November 1933 removed its note-issuing right with effect from 31 December 1935. Rather than being immediately liquidated, Bank of Saxony cooperated with Sächsische Staatsbank and assumed that institution’s customer business on 1 January 1937. By 1945, Sächsische Staatsbank held 80 percent of Bank of Saxony’s capital, indicating the extent to which the bank had become integrated into the Saxon state-banking structure. After the Second World War, the bank was expropriated without compensation by Soviet occupation authorities, together with Sächsische Staatsbank. Bank of Saxony was eventually deleted from the commercial register in 1947. Some holdings in western Germany were not immediately resolved: from 1950 to 1980 they were administered through a fiduciary entity appointed by the West German Federal Finance Minister. The residual assets were liquidated and paid off by 1981. Bank of Saxony consequently survives as a subject of German banking and monetary history, not as an active financial-services brand.
- 1981
Final liquidation of remaining assets
[1]Assets held through a western German fiduciary arrangement were ultimately liquidated and paid off.
- 1947
Deletion from the commercial register
[1]Bank of Saxony was removed from the commercial register.
- 1945
Expropriation by Soviet occupation authorities
[1]The bank and Sächsische Staatsbank were expropriated without compensation after the war.
- 1937
Transfer of Sächsische Staatsbank customer business
[1]Bank of Saxony took over Sächsische Staatsbank’s customer business as part of an effort to avoid liquidation.
- 1935
Loss of banknote issuance rights
[1]The bank’s note-issuing privilege ended on 31 December under legislation enacted in 1933.
- 1924
Post-hyperinflation monetary restrictions
[1]The Private Central Bank Act capped annual note issuance at 70 million Reichsmarks and changed the bank’s share capital to 15 million Reichsmarks.
- 1890
Becomes Saxony’s sole note-issuing bank
[1]After other Saxon institutions abandoned note issuance, Bank of Saxony became the only bank in Saxony retaining that privilege.
- 1888
Introduction of commission-free check and giro services
[1]Bank of Saxony began offering customers commission-free check and giro transactions.
- 1875
Reichsbank legislation preserves limited local note issuance
[1]Imperial legislation created the Reichsbank but allowed certain existing local central banks to continue issuing notes within statutory limits.
- 1873
Capital increase
[1]The bank increased its capital by a further 5 million thalers; it was later denominated at 30 million marks.
Products and positioning
A state-concessioned regional bank and note-issuing institution serving Saxony within the German monetary and banking system of the late nineteenth and early twentieth centuries.
Currency issuance · 1865
Banknotes
Bank of Saxony was historically significant as a note-issuing bank. After other Saxon institutions surrendered comparable privileges, it became Saxony’s sole remaining issuer. Its notes could circulate throughout the German Empire, subject to the legal restrictions that followed the creation of the Reichsbank and the monetary reforms after 1923. The privilege ended on 31 December 1935 under Nazi-era legislation.
Payments · 1888
Check and giro transactions
From 1888, the bank offered commission-free check and giro transactions. These services supported account-based payments and transfers for customers and represented an expansion beyond lending, deposits, and banknote circulation.
Commercial banking · 1865
Regional banking services
The bank provided general regional banking services as a Saxon institution, operating within the legal and monetary frameworks of the Kingdom of Saxony, the German Empire, and later Germany. Specific individual loan, deposit, and investment products are not identified in the available reference material.
Transport subsidiaries
Bus-route operations
During the 1920s, subsidiaries associated with Bank of Saxony operated bus routes. These operations often provided feeder services to state railway lines, illustrating the institution’s temporary diversification into regional transport infrastructure.
Brand decisions
1937
Cooperation with Sächsische StaatsbankStrategyBackground
After its banknote privilege had been withdrawn, Bank of Saxony faced the prospect of liquidation under the reorganized banking system.
Action taken
The bank cooperated with Sächsische Staatsbank and took over the latter’s customer business on 1 January 1937.
Aftermath
The arrangement postponed immediate liquidation, but the bank was later expropriated in 1945 and removed from the commercial register in 1947.
1935
End of banknote issuanceOtherBackground
Nazi monetary legislation centralized control over note issuance and withdrew the privileges of several surviving regional note-issuing banks.
Action taken
Bank of Saxony ceased issuing banknotes from 31 December 1935.
Aftermath
The loss of its defining monetary function contributed to the bank’s subsequent integration with Sächsische Staatsbank.
Sources1 sources
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