The German banking industry is a highly regulated market with over 2,200 banks1. These banks are not equal at all. On the one hand, there are private owned commercial banks; on the other hand there exist savings banks, so-called ‘Sparkassen’, as well as ‘Genossenschaftsbanken’ that are equal to credit unions in the U.S. The German banking industry is just at the beginning of a structural change. In the recent past there have been a couple of mergers and bankruptcies within the banking industry. But a big change did not happen yet. In this paper we analyze the four biggest and most important German commercial banks -Deutsche Bank, HypoVereinsbank, Commerzbank, and Dresdner Bank - and their standing within the international banking industry. We examine the profit situation, the credit management, the worldwide role in asset management, as well as mergers and acquisitions during the past few years. Additionally, we expounded possible structural changes and chances within the German banking industry in the near future.
Table of Contents
1. INTRODUCTION
2. DEUTSCHE BANK AG
2.1. OVERVIEW
2.2. OPERATING BUSINESS EVALUATION
3. COMMERZBANK AG
3.1. OVERVIEW
3.2. OPERATING BUSINESS EVALUATION
4. ALLIANZ GROUP (DRESDNER BANK)
4.1. OVERVIEW
4.2. OPERATING BUSINESS EVALUATION
5. HYPOVEREINSBANK AG
5.1. OVERVIEW
5.2. OPERATING BUSINESS EVALUATION
6. COMPARISON BETWEEN GERMAN AND U.S. COMMERCIAL BANKS
7. ADVANCED ANALYSIS
7.1. ECONOMIC REASONS FOR THE RELATIVE UNDERPERFORMANCE OF GERMAN COMMERCIAL BANKS
7.2. MERGERS & ACQUISITIONS
7.3. GERMAN COMMERCIAL BANKS AND ASSET MANAGEMENT
8. SUMMARY & CONCLUSION
Research Objectives and Topics
This paper aims to analyze the four largest German commercial banks (Deutsche Bank, HypoVereinsbank, Commerzbank, and Dresdner Bank) to evaluate their standing within the international banking industry, specifically comparing their performance against U.S. counterparts and exploring reasons for their relative underperformance.
- Analysis of profitability and operating performance ratios
- Comparison of German commercial banks with the U.S. banking sector
- Evaluation of strategic mergers and acquisitions
- Assessment of asset management roles
- Discussion of structural challenges and future outlook for German banking
Excerpt from the Book
1. INTRODUCTION
The German banking industry is a large market of over €6,600 billion. 2,200 banks that are employing around 750,000 people as of October 2004 share this market. Compared to 3,280 banks as of January 1999 and 2,575 banks as of December 2001 it shows a declining trend in the number of banks. The German banking industry is mainly divided in commercial banks, savings banks, and credit unions.
There exist 489 local operating savings banks as of December 2003, which are owned by municipals. These savings banks belong to the ‘Sparkassen-Finanzgruppe’. Besides that the ‘Sparkassen’-Group mainly consists of 11 building and loan associations (‘Landesbausparkassen’), 36 public insurance companies, and 12 ‘Landesbanken’. The ‘Landesbanken’ are similar to the savings banks, but they are owned by states and they are operating nationally as well as internationally. The market share in lending and deposits of the ‘Sparkassen’-Group equaled 40% in 2002. The strength of the ‘Sparkassen’ consists in its presence in almost every city. ‘Sparkassen’ are offering a wide range of services to everybody, especially to low wage-earners.
Summary of Chapters
1. INTRODUCTION: Provides an overview of the German banking system, its structure (commercial banks, savings banks, credit unions), and the overall market context.
2. DEUTSCHE BANK AG: Analyzes the overview and operating performance of Deutsche Bank, highlighting its international strategy and global market position.
3. COMMERZBANK AG: Examines Commerzbank's operational challenges, focusing on its recent losses and the ongoing restructuring efforts.
4. ALLIANZ GROUP (DRESDNER BANK): Discusses the integration of Dresdner Bank into the Allianz Group and the challenges faced by this combination.
5. HYPOVEREINSBANK AG: Evaluates HypoVereinsbank's profit problems and its specific focus on the German, Austrian, and Eastern European markets.
6. COMPARISON BETWEEN GERMAN AND U.S. COMMERCIAL BANKS: Compares the performance (ROE, ROA) and market capitalization of German banks against U.S. competitors, highlighting significant disparities.
7. ADVANCED ANALYSIS: Investigates the economic reasons behind the underperformance of German banks, including structural, labor, and regulatory factors, and analyzes M&A history and asset management strategies.
8. SUMMARY & CONCLUSION: Synthesizes the main findings and provides an outlook on potential future structural changes in the German banking industry.
Key Terms
German commercial banks, Deutsche Bank, Commerzbank, Dresdner Bank, HypoVereinsbank, Banking industry, Return on Equity (ROE), Return on Assets (ROA), Asset management, Mergers and Acquisitions, Structural change, Market capitalization, U.S. banking market, Overhead ratio, Credit quality
Frequently Asked Questions
What is the primary purpose of this research paper?
The paper examines the performance and strategic positioning of the four largest German commercial banks to understand why they have underperformed compared to their international, particularly U.S., counterparts.
What are the central themes discussed in the study?
The study centers on the profitability of major German banks, the impact of their M&A activities, their asset management capabilities, and the structural differences between the German and U.S. banking systems.
What is the main research question or objective?
The core objective is to analyze the profit situation, international standing, and structural challenges of German commercial banks, aiming to identify the causes of their relative underperformance.
Which scientific methods or analytical tools are utilized?
The study employs a comparative analysis of financial ratios, such as Return on Equity (ROE), Return on Assets (ROA), overhead ratios, and credit quality data, supplemented by market capitalization comparisons.
What does the main body of the paper cover?
The main body provides detailed profiles of the four major banks (Deutsche Bank, Commerzbank, Dresdner Bank, HypoVereinsbank), compares them to the U.S. market, and conducts an advanced analysis of economic and structural factors.
Which keywords characterize this paper best?
Key terms include German commercial banks, ROE, ROA, banking industry analysis, financial performance, mergers and acquisitions, and asset management.
How does the author evaluate the impact of Allianz Group acquiring Dresdner Bank?
The author suggests that the integration has been challenging and not as simple as expected, resulting in significant operational difficulties and rising costs for the bank.
Why does the author conclude that German banks are potential takeover candidates?
Due to their relatively low market capitalization and underperformance compared to international competitors, the author posits that most German banks are vulnerable to being acquired.
- Quote paper
- Andreas Vester (Author), 2004, Comparison of the Most Important German Commercial Banks, Munich, GRIN Verlag, https://www.grin.com/document/49398
