Significant decline in the number of credit institutions

The consolidation process in the German banking sector gained momentum last year. Over the course of 2016, the overall number of credit institutions (in Germany) fell by 72 to 1,888 institutions. This corresponds to a 3.7% decline in 2016 compared with a drop of 1.5% in 2015. "The consolidation process has gained momentum", emphasised Dr Andreas Dombret, the Bundesbank Executive Board member responsible for banking supervision. "This is a clear signal that the pressure from competition and the low-interest-rate environment is still high and that banks feel compelled to review their cost structures and distribution channels."

All in all, 24 new openings and 96 closures were recorded. Of these closures, 52 (2015: 25) were attributable to mergers in the cooperative sector. The number of institutions in the cooperative bank sector thus, for the first time, dropped below the 1,000 mark and now stands at 976, representing a significant drop of 5.0%. In the savings bank sector, 10 institutions (2015: three) each merged with another institution from the same banking group. The number of commercial banks in 2016 fell by nine (2015: one) to 381 banks. Of these, 12 new openings and 15 closures belonged to the "Branches of foreign banks and securities trading banks" category. With 10 new openings and 16 closures, the number of banks in the "Regional and securities trading banks and other commercial banks" category dipped slightly once again to 189 (see Table 1 for details).

Number of domestic branches falling rapidly

The number of domestic branches contracted very considerably in 2016 by 2,019, or 5.9% (2015: 1,257, or 3.6%), to 32,026 branches.

A net decline in the number of branches was observed in nearly all sectors of the banking industry except among branches of foreign banks. The greatest drop was once again recorded in the savings bank sector (including Landesbanken, this figure amounted to -922), to 10,939. This sector, however, continues to be the home of the largest number of branches (34.2%).

The cooperative banking sector, too, saw a considerable decline by 664 to 10,169, representing 31.5% of the network of branches of German credit institutions.

The number of commercial bank branches declined by 283 in net terms to 9,444 (2015: 9,727), representing an overall share of 29.5% (2015: 28.6%). The decline was attributable mainly to big banks, which reduced their domestic branch network by 235 banks to a current total of only 7,005 domestic branches, which continue to represent the largest share of all commercial bank branches. The regional banks likewise cut their branch network by 65 to 2,275.

The number of public building and loan association branches dipped by 91 to 533, while that of private building and loan association branches decreased by 45 to 867. The number of mortgage bank branches fell by 13 to 36, bringing the total number of branches of "other institutions (excluding building and loan associations)" to a figure of only 74 (see Table 2).

Considerably fewer foreign subsidiaries and fewer foreign branches

German credit institutions’ trend of maintaining a foreign presence continued to abate across all banking groups during the reporting year. The number of subsidiaries domiciled abroad[1] dwindled by approximately one-sixth (-28) at the end of 2016 from 173 in the previous year to 145 as things currently stand. The number of subsidiaries of German banks throughout the world alone fell by 24 to 102.

By contrast, the number of branches of German credit institutions abroad went down only slightly last year by six to 234 (-2.5%).

Some 70% of all foreign branches as well as nearly half of foreign subsidiaries are located in Europe, predominantly in member states of the European Union (see Table 3). This includes 27 foreign branches (2015: 28) and, unchanged, 10 foreign subsidiaries located in the United Kingdom.

Footnote:

1. Stake of more than 50% in a foreign credit institution.