The CEO of Deutsche Bank has called for consolidation in Germany's banking sector, but which lenders would be in a position to absorb others?
Concern over Europe’s fragmented bank sectors tend to revolve around countries in southern Europe. But Deutsche Bank CEO John Cryan’s recent call for more bank mergers within Germany reveals that even the continent's strongest economies are in need of consolidation.
Mr Cryan’s comments followed reports that Deutsche Bank and Commerzbank, the country’s two biggest banks, held tie-up talks in April. Mr Cryan made clear he was not considering any major merger and acquisition activity, but he also reportedly said that there are too many banks in Germany and that mergers are needed.
The country has more than 2000 lenders. The Banker Database shows Germany's biggest players, and whether or not they have the balance sheets to absorb some of their smaller counterparts.
Aside From Deutsche Bank, whose profitability issues have been well publicised, the next six biggest lenders have pre-tax profits hovering between $577.17m (Landesbank Baden Wurttemberg or LBBW) and $2.67bn (Deutsche Zentral-Genossenschaftsbank or DZ Bank).
The country’s biggest six banks have non-performing loan (NPL) ratios well below The Banker’s Top 1000 average of 3.62%. However, NPLs account for 5% of Norddeutsche Landesbank’s (NordLB’s) loan portfolio.
See www.thebankerdatabase.com for more information on German banks’ balance sheets.
