Consolidation in banking sector continues
The consolidation process in the German banking sector continued in 2019. Over the course of the year, the overall number of credit institutions fell by 66 to 1,717. This corresponds to a 3.7% decline, compared with a drop of 2.2% in 2018.
The fall in the number of institutions in 2018 was slowed down somewhat as a result of international banks relocating to Germany in anticipation of Brexit. In 2019, numerous closures and conversions of branches of British securities trading banks intensified the downward trend.
Operations ensured even in times of crisis
“The consolidation process in the German banking sector and the downsizing of the branch network continued in 2019. This shows that banks are actively responding to tough competition and changes in customer behaviour,” said Bundesbank Executive Board member Joachim Wuermeling in reference to the new figures. “This process is necessary for economic reasons,” he added.
At the same time, Mr Wuermeling is pleased that banking operations are ensured despite the current pandemic.
“Contingency plans have proved to be effective. Even if banks temporarily close individual branches, banking services are still available to customers in the form of self-service terminals and ATMs,” said Mr Wuermeling, noting that it was especially important for banks to also be in a position operationally to play their role in supplying credit to the economy in the context of providing coronavirus aid. Mr Wuermeling added that, as regards banking supervision, a number of administrative burdens had been reduced for the duration of the crisis period.
Number of domestic branches down again sharply
The number of domestic branches plummeted again in 2019, falling by 1,220, or 4.4%, to 26,667, following an even greater decline of 2,239 branches the year before. The figure includes traditional branches and facilities with self-service terminals and additional access to staff for assistance. Self-service terminals without such access are not included in the figure. This development reflects the impact of digitalisation on distribution channels due to greater use of online services as well as cost-cutting measures made necessary by the competitive environment.
Considerably more foreign branches in the wake of Brexit preparations
At the end of 2019, the number of subsidiaries of German banks domiciled abroad had fallen from 97 to 92. The number of subsidiaries of German big banks remained relatively constant at 67 (-1), while regional banks reduced their foreign presence, taking the number of their subsidiaries down by 4 to 11.
By contrast, the number of branches of German credit institutions abroad rose significantly last year by 25 to 251 (+11.1%). This increase is connected to preparations for Brexit, which saw some international banks relocate their European headquarters to Germany and open branches, primarily in other European countries. Nearly three-quarters of all foreign branches as well as just under half of foreign subsidiaries are located in Europe, mainly in EU Member States. As at year-end 2019, this includes a total of 29 foreign branches (2018: 27) and 5 foreign subsidiaries (2018: 6) located in the United Kingdom.