German Banking Sector in Motion
There is no lack of movement in the German banking sector, particularly at pan-European level right now, as shown by the recently announced merger between UniCredito and HypoVereinsbank. At the same time, domestic events have also introduced changes affecting the top 100 bank rankings.
Until 1997, the German banking sector was firmly dominated by the three Frankfurt-based big banks, whose leading rankings remained unchanged for years: Deutsche Bank held the number one spot, followed by Dresdner Bank in second place and Commerzbank in third. The picture only changed in 1998, when Bayerische Vereinsbank and Bayerische Hypotheken-und Wechselbank merged in Munich to become Germany’s fourth big bank, HypoVereinsbank (HVB), which currently ranks third among the top 100 banks.
The big banks were shaken up again in 2001 by Dresdner Bank’s incorporation into the Allianz Group, which sees a combination of banking and insurance as the ideal business model. Dresdner’s importance in the German financial marketplace is underlined by the fact that, after ranking third and fourth in the two years before, it moved into second place last year among the top 100 banks, with around 10 per cent increase in total assets.
The change in the once seemingly immovable big bank structure in Germany is now taking on a cross-border dimension, as HVB’s board has opted for a pan-European strategy. Completion of the planned merger with UniCredito Italiano will create a new force to be reckoned with in the European financial marketplace: the UniCredito/HVB Group will have 28 million customers and over 7,000 branches in 19 countries, with a powerful presence in Bavaria, Austria and northern Italy – one of the wealthiest regions in Europe. With combined total assets of €733bn, it will rank eighth in the European banking league. In comparison, Deutsche Bank ranks fifth with total assets of €840bn.
But there was another change that affected the big banks: their number increased to five, since Deutsche Postbank AG (Bonn) is now classified as a big bank in the Bundesbank’s banking system statistics. Postbank ranks 16th among the top 100 German banks.
On 1 January 1995 the then Federal Minister of Posts and Telecommunications, Wolfgang Bötsch, privatised Postbank as the successor to the state-owned Deutsche Bundespost Postbank. The climax of the privatisation process was the public flotation on 23 June 2004, which saw Postbank stock soar in price by 40 per cent by the end of the year, well outperforming the DAX – a clear sign of the undertaking’s success.
New competitive structures also emerged in the group of private bankers. For example, Sal. Oppenheim jr. & Cie., the old-established private banker in Cologne, entered a new dimension by taking over BHF-Bank from the ING Group. In doing so, it more than doubled its staff to around 3,000, while assets under administration jumped to approximately €100bn and total assets increased by nearly 160 per cent to around €25bn. The fact that Sal. Oppenheim ranks 66th, and not 47th, among the top 100 banks is because the BHF-Bank takeover took place on 1 January 2005 and could therefore not be taken into account in the 2004 rankings.
A new private banker with international pedigree was created in Germany by ABN Amro. The Dutch financial group first acquired Delbrück & Co., the almost 300-year-old Cologne-based private banker in 2003, then took over Bankhaus Bethmann Maffei. Following contribution of a sizeable volume of assets under administration by ABN Amro, Delbrück Bethmann Maffei AG started operation with total AUA of over €1bn. Although it is, by its own account, one of the top five private bankers in Germany, it does not figure among the 100 biggest banks as its total assets are (still) less than €6bn.
The direct banks are also demonstrating their growth potential. For instance, Diba Allgemeine Deutsche Direktbank, which is part of the Dutch financial group ING, continued its surge up the rankings. After coming 97th in 2002, Europe’s biggest direct bank jumped to 29th last year. The car finance banks are likewise doing well. Following its growth of the past few years, Volkswagenbank now holds a mid-table ranking (49th). Seven places behind comes another car finance bank: DaimlerChrysler Bank, which has only had a full banking licence for three years.
The Landesbank group, which has dominated places five to 20 in the top 100 banks for many years, is led by Landesbank Baden-Württemberg (LBBW), closely followed by Bayerische Landesbank. WestLB, which had already slipped down the top 100 rankings in 2002 after Landesbank NRW was spun off, is now in ninth place. The balance of power among the Landesbanks changed even more at the beginning of 2005 as LBBW took over Landesbank Rheinland-Pfalz. With combined total assets of over €400bn, LBBW is now Germany’s fifth largest bank.
The number of savings banks continued to decline in 2004 from 489 to 477. With total assets of €31.3bn, Hamburger Sparkasse remains the biggest savings bank in 42nd place, followed again by Stadtsparkasse Köln and Kreissparkasse Köln in 47th and 48th place respectively. The troubled Frankfurter Sparkasse comes 60th. Finally, the merger between Sparkasse Dresden and Sparkasse Elbtal-Westlausitz created eastern Germany’s biggest savings bank, Ostsächsische Sparkasse Dresden.