The sad story of SchmidtBank is a timely parable for the Mittelstand, the 3m or so mostly small, owner-run firms that constitute the mass of German business. Itself a family firm, founded in 1828, SchmidtBank specialised in lending to small firms in Bavaria and neighbouring states. Last month, facing extinction, it was rescued by a group of big banks, which paid €1 (89 cents) between them for the Schmidt family's 65% stake. The bank lacked the wherewithal-€4Oom, it is said-to make provisions against its bad loans. Its troubles partly reflect the parlous state of Germany's economy: GDP is shrinking and bankruptcies are rising.
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