Top 100 German banks in 2006: on a growth course

Thanks to the sharp upturn in the global economy and a favourable capital market climate, Germany’s banks steered a growth course in 2006. And both the business expansion and the upbeat earnings trend continued in the first half of 2007. That goes at least for the majority of banks, so that positive figures dominate in the Top 100.

[ Top 100 Table ]

Germany’s leading bank, Deutsche Bank, entered new dimensions in 2006: for the first time, its total assets topped the one-thousand-billion-euro mark at € 1,126 billion.

Frankfurt big banks lead
Commerzbank moved firmly into second place among Germany’s Top 100 banks. It was given a powerful boost particularly by the takeover of the biggest German mortgage bank, Eurohypo (total assets: € 224.3 billion). Dresdner Bank holds third spot, completing the familiar picture of earlier decades with the three Frankfurt big banks heading the rankings.

This scenario changed in 1998 when Bayerische Vereinsbank and Bayerische Hypotheken- und Wechselbank merged in Munich to form HypoVereinsbank (HVB), Germany’s fourth big bank, which came second in the rankings in 2005. Following its cross-border merger with Italy’s UniCredit Group, the focus is now more on the European dimension. This merger put the new financial group among Europe’s Top 10 banks. At the same time, restructuring within the UniCredit Group has led to a reduction in HVB’s total assets, so that HVB now ranks 7th among the Top 100 banks in Germany.

Deutsche Postbank is unmistakably on the way up. Its takeover of BHW helped it jump three places in the rankings, from 16th to 13th. The BHW takeover reflects Postbank’s strategy of further strengthening its already strong position in retail banking.

The Top 20 banks include seven Landesbanks. The biggest of these is Landesbank Baden-Württemberg (LBBW), in 5th place, followed by BayernLB and WestLB. In the Landesbank group, there is talk of mergers that would lead to marked shifts in rankings.

In contrast, the rankings of the biggest savings banks remained stable in 2006: with total assets of around € 34 billion, Hamburger Sparkasse again led the way, in 40th place.

Expanding specialists
The specialist banks remained on an expansion course in 2006. For example, ING-DiBa, with a 12% growth in total assets, continued its surge up the rankings. Europe’s biggest direct bank climbed from 27th to 24th last year. The financial services subsidiaries of the three big German car makers are also doing well. Their finance business has a long tradition going back many decades. VW set up its own finance division as early as 1949. BMW followed suit in the early 1970s and Daimler-Benz in 1979. The three subsidiaries no longer confine themselves to car finance but offer a wide range of financial services as direct banks. Following the strong growth of the past few years, Volkswagen Bank now ranks 48th in the Top 100 banks. DaimlerChrysler Bank comes nine places behind.

Positive impact on jobs
The upbeat business trend means that the reduction in staff levels at German banks has slowed down somewhat recently. The number of bank employees dropped in 2005 and 2006 by an average of 1.5% per year. According to the banking employers’ association, 681,300 persons were employed in the German banking industry last year. Remarkably, the number of employees at the three big Frankfurt banks actually increased in 2006 by fully 7,200 to 132,449.

Car finance: a buoyant line of business
The automobile society is growing. Germans now own over 46 million cars. This offers great opportunities for the banking industry, as a new study called “Selling finance in the automobile trade” by the market research institute Psychonomics shows.

At present, Santander Consumer Bank (formerly CC-Bank), which specialises in consumer loans, and Volkswagen Bank, Europe’s biggest automobile bank, dominate car finance in Germany. Further automobile banks (e.g. DaimlerChrysler, BMW, Opel, Ford) follow some way behind. Alongside the strongly positioned Santander Bank, other finance specialists such as GE Money Bank or Credit Plus have only managed to win small market shares to date.

Generally speaking, however, German banks have good business opportunities, as only 44% of car dealers are tied to one particular bank through the manufacturers and around one in three dealers does business with more than one bank. At the same time, there are signs of further growth in the market as a whole: more than two-thirds of car dealers aim to increase the commission income they earn from arranging financial services this year.

Top 100 Banks 2005
Top 100 Banks 2004

Copyright: Zeitschrift Die Bank