Pace of decline in credit institution numbers continues to slow slightly – but cuts in domestic branch numbers significant compared with previous years

The consolidation process in the German banking sector, which has been taking place for many years now, continued at a reduced pace in 2024. Over the course of the year, the overall number of credit institutions fell by 35 in net terms (55 in the previous year) to 1,368. This was primarily attributable to 33 mergers (2023: 52), the majority of which were in the cooperative sector. Of the total 45 departures, 8 were due to licences being relinquished, 3 to reclassifications within the cooperative sector and 1 to licences being revoked. This contrasts with 10 additions, mostly foreign credit institutions aiming to establish a presence in Germany and the 3 aforementioned reclassifications in the cooperative sector.

The number of domestic branches fell significantly, dropping from 19,501 to 17,870. At 8.4%, the decline was much stronger than in previous years (around 5% in 2023, around 6% in 2022). The increasing prevalence of online banking and the response to credit institutions’ lower profitability in the face of several years of low interest rates, with the pressure this brought to cut costs, led to a thinning-out of the branch network in all banking sectors. This development was especially evident among the big banks.

How the number of credit institutions changed

In 2024, there were a total of 10 additions (2023: 8) and 45 departures (2023: 63) among credit institutions.[1] Of the departures, 25 (2023: 39) were attributable to mergers in the cooperative sector. The number of cooperative institutions thus fell to 672, equating to another drop of just under 4%.

In the savings bank sector, mergers caused the number of institutions to fall by 5 (2023: 8), leaving 349 savings banks alongside 6 Landesbanken (unchanged on the year).

The number of commercial banks declined by 4 (as in the previous year) to 238 institutions in 2024, with the number of big banks remaining unchanged at 3. 

The number of regional banks and other commercial banks fell from 137 to 133. There was a single addition versus 5 departures, 3 of which were attributable to mergers, 1 to licences being revoked and 1 to changing legal form to become an investment firm.

In the case of branches of foreign credit institutions, 5 additions were offset by 5 departures, meaning the number remained unchanged at 102 institutions.

The number of private building and loan associations fell by 1 institution to 8 due to a merger, while the number of public building and loan associations remained the same in 2024, at 5. Other institutions underwent no changes.

Number of domestic branches down more sharply than in previous years 

The number of domestic branches[2] fell more sharply in 2024 than in previous years, dropping by 1,631, or 8.4%, to 17,870. The number of branches had decreased by only 945 branches (4.6%) in the previous year and by 1,266 branches (5.8%) in 2022. This development reflects the impact of digitalisation on distribution channels due to greater use of online banking, as well as cost-cutting measures undertaken in a challenging competitive environment.

The biggest branch cuts were seen among the big banks, which brought their branch numbers down by 1,287, or more than one-third (-37.1%), to 2,184. This reduction was significantly greater than in previous years (2023: -248, or -6.7%; 2022: -318, or -7.9%). It was almost exclusively attributable to Deutsche Bank, which made significantly cuts to the branch network of the now-defunct Postbank, in particular. Big banks thus now account for only 12.2% of the total number of branches (2023: 17.8%). By contrast, the regional banks’ branch network expanded slightly, going up by 2 to 943 branches.

All in all, commercial banks had reduced the number of their branches by 1,280 to 3,292 by the end of 2024, leaving them with an overall share of only 18.4% (2023: 23.4%).

In both the savings bank and cooperative sectors, there was a slowdown in the rate of branch closures compared with previous years. Savings banks (including Landesbanken) thinned out their branch network by 178 branches (2023: 366) to 6,926, putting the number of branches below 7,000 for the first time. With a share of 38.8%, this sector still has the largest number of domestic branches.

In the cooperative sector, the number of branches fell by 186 in net terms (2023: 306) to 6,402. This sector’s share in the total number of domestic branches thus amounts to 35.8%.

The number of branches of private building and loan associations fell by 21 to 722, whereas public building and loan associations actually reported an additional 37 branches, bringing their total up to 480.

Slight decrease in the number of foreign branches and foreign subsidiaries

The number of subsidiaries[3] of German banks domiciled abroad fell slightly, down from 76 to 73 as at the end of 2024 (see Table 3). With 58 foreign subsidiaries, unchanged on the year, the big banks still account for the lion’s share of the total figure. The other bank categories are less strongly represented abroad (regional banks had 7 foreign subsidiaries, DZ-Bank in the cooperative sector 4, the Landesbanken 3, special purpose banks 1).

The number of branches of German credit institutions abroad rose moderately, increasing by 14 to 271 (+5.4%). The additions were primarily among the regional banks and other commercial banks, with one regional bank retroactively reporting a total of 15 foreign branches opened in previous years.

Just over three-quarters of all foreign branches as well as almost one-half of foreign subsidiaries were located in Europe, mainly in EU Member States (see Table 3). As at the end of 2024, German banks had 21 foreign branches and 4 (2023: 5) foreign subsidiaries in the United Kingdom.

Footnotes:

1. This includes three institutions in the cooperative sector that were reclassified from the “Other credit institutions affiliated with the BVR” to “Credit cooperatives”.
2. Branches pursuant to Section 24(1a) number 4 of the German Banking Act. Branches that only provide automated banking or financial services are not included here.
3. Equity interest of more than 50% in a foreign credit institution.