A group of financial investors is interested in taking over the Wiesbaden real estate financier.
(Photo: dpa)
Actually, a look at the German banking landscape does not present a particularly idyllic picture: an overcrowded market with chronic pressure on margins, the consequences have been known for years: sclerotic profits.
The symptoms are exacerbated by the negative interest rates from the European Central Bank. Despite this clinical picture, financial investors apparently firmly believe that money can be made with German banks.
The US investment company Cerberus has invested in Deutsche Bank and Commerzbank. In addition, the Americans, together with JC Flowers, played a leading role in the takeover of the ailing HSH Nordbank, which today operates under the name Hamburg Commercial Bank.
Lone Star grabbed IKB, which gained dubious fame during the financial crisis, and a consortium around Apollo grabbed the Oldenburgische Landesbank. Now a group of investors are interested in buying the real estate financier Aareal.
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While Cerberus has only limited influence as a minority shareholder in the two big banks, a clear strategy can be seen in the institutions where financial investors can rule: radical downsizing and a sharply defined business model.
Doubts are in order
Both the former HSH Nordbank and IKB have massively cut their balance sheets and have implemented tough austerity measures, including in terms of staff. Both institutes are now concentrating on fairly manageable market areas. The reward for shrinking is significantly better economic data.
One could conclude from this that banks in Germany are most likely to operate profitably if they occupy lucrative niches with the leanest possible cost structure. At least in the second part of this thesis there are doubts.
Even an efficient platform pays off better, the higher the workload. This means that the institutions that have shrunk to health will at some point either grow again or have to merge into a larger unit in order to meet the return expectations of financial investors.
That can take time – as the example of IKB shows for a long time: 13 years have passed since the takeover by Lone Star ve1909000563r, and in August the bank announced that all sales and stock market plans were off the table for the time being. But at least Lone Star can look forward to the first dividend in 15 years.
More: New Bafin boss: “The greatest economic risk is the interest rate environment”