Sat, Oct 27, 2018 - Page 10 News List

German regional banks talking megamerger: sources

Bloomberg

Several of Germany’s biggest public-sector banks are weighing a merger to shore up their position in a market that has seen overcapacity and intense competition, according to people with knowledge of the matter.

The initiative, which could create the nation’s second-largest lender by assets, marks an attempt to protect Germany’s weakened landesbanks, which are owned by federal states and local savings banks. Market and regulatory pressures are pushing them to break with tradition and seek outside shareholders.

Under the plan, Helaba and NordLB would combine in a first step, and then merge with DekaBank and LBBW at a later stage, the people said.

Deka is a central institution for the savings banks, or sparkassen, acting mainly as an asset manager. The people asked not to be identified, because the deliberations are private.

The proposed merger would be the biggest among German banks since 2010. It comes amid evidence of a revived support among Germany’s politicians for domestic banks with enough scale to serve the global ambitions of the country’s export champions.

The effort is being driven by Helmut Schleweis, the Berlin-based head of Germany’s savings banks association DSGV, one of the people said.

“The process begun by the owners of NordLB to attract investors has caused the DSGV to prepare options and actions that may be needed,” the association said in an e-mailed statement. “The deliberations are still at their beginning. No decisions have been taken in advance, and the possible results can’t be predicted at the present time.”

A fifth and smaller bank, real-estate lender Berlin Hyp, might also be combined with the other four, Handelsblatt reported.

Bloomberg data showed that the five banks had total assets of about 682 billion euros (US$776 million at the current exchange rate) at the end of last year.

That would make it bigger than Germany’s second-largest listed bank, Commerzbank AG.

Officials for DekaBank, Helaba, LBBW, NordLB and Berlin Hyp declined to comment when contacted.

One bank conspicuously absent from the merger plan is Munich-based BayernLB, the second-largest of Germany’s landesbanks, with 215 billion euros in assets at the end of last year.

That might reflect diverging business priorities: BayernLB owns digital bank DKB, which competes directly with Sparkassen across the country — and generates nearly half of BayernLB’s profit.

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