BayernLB generates around 90 percent of its precious metal sales with gold.
(Photo: dpa)
Munich BayernLB is increasingly becoming one of the most important gold traders in Germany. Last year, the Landesbank sold a record weight of around 85 tons of gold from its branch in Nuremberg to customers, mostly via savings banks. That is nine tons more than in 2021.
“We see further growth opportunities in the precious metals business and want to expand this area,” said CEO Stephan Winkelmeier on Wednesday. The numerous different crises worldwide had driven many investors into safe havens like gold.
Landesbank has been operating a modern distribution and custody center in Nuremberg since 2013. Gold and other precious metals are traded there, and customers can also have these values stored there. Over the years, investments have been made in security equipment, infrastructure and distribution.
A good two-thirds of all German savings banks are now supplied with precious metals from Nuremberg. But cooperative and private banks also order coins and bars there for their customers.
“We were able to deliver when gold was not available elsewhere due to high demand,” says Winkelmeier. The Landesbank benefits from the fact that it has built up good contacts with bar producers and mints over the years. As a so-called direct source of supply, the Landesbank branch was often able to fulfill customer orders in the past year.
Consolidation in the savings bank warehouse
Another reason for BayernLB’s strong position as a gold trader is the consolidation in the savings bank warehouse. At the end of the year, Landesbank Baden-Württemberg (LBBW) withdrew from this area and has been brokering its physical precious metals business to Helaba ever since. Instead of going to Frankfurt, almost half of former LBBW customers switched to BayernLB. This leaves only two precious metal suppliers in the Sparkasse warehouse.
However, it is questionable whether the record high demand for gold will continue this year. This would be supported by the fact that inflation, coupled with general uncertainty, is keeping interest high.
However, with the turnaround in interest rates, bonds, which also offer a high level of security from the customer’s point of view, are becoming more attractive again. However, the demand for precious metals is still high this year. BayernLB generates around 90 percent of its precious metal sales with gold.
The high customer demand for precious metals from savings banks, banks and dealers doubled the pre-tax profit in business with savings banks and financial institutions last year to 76 million euros.
However, as in previous years, direct bank DKB made the largest contribution to BayernLB’s total profit of EUR 1.1 billion, with EUR 354 million. The second largest online bank in Germany behind ING now has around 5.3 million customers, compared to five million a year earlier.
The management had recently said goodbye to the goal originally set in 2020 of reaching eight million customers by 2024. The focus is now on doing more business with individual customers instead of the sheer number of them. However, according to BayernLB boss Winkelmeier, the number of customers would have to increase for the cost of capital to be earned.
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