German banks see the influx of foreign banks into Frankfurt in the wake of Brexit as a chance to reinvigorate their flagging industry group and boost their lobbying leverage. The once-powerful Association of German Banks has seen its influence decline in recent years but now hopes closer links with the Brexiteers will restore its clout.
The industry group, known by its German acronym BdB, may even seek to merge with the separate Foreign Bankers Association (VAB) in order to consolidate their interests and to make its much more considerable resources available to the foreign institutions. Ultimately the German group hopes to become “the” international banking lobby for all of Europe, taking over the role of the highly influential British Bankers’ Association.
“Germany as a financial center will become significantly more international with Brexit and that must be reflected in the BdB,” Christian Ossig, the newly installed co-chief executive of the industry group, told Handelsblatt. “Eventually we want to become the most international banking association in Europe.”
Eventually we want to become the most international banking association in Europe. Christian Ossig, co-chief executive, Association of German Banks
The infusion of new blood would come after an unsettled period for the BdB, as German banks were rocked by the 2008 financial crisis and consolidation of the sector on a European and global level eroded their competitiveness in Germany as well as abroad. Foreign institutions have acquired some of the bigger regional banks, while the German flagship, Deutsche Bank, has been rocked by scandal and is still struggling to right itself.
In addition, the current chairman of the banking group, Hans-Walter Peters from the Berenberg banking house in Hamburg, has been criticized for creating turmoil in the association staff, resulting in the departure of Mr. Ossig’s popular predecessor, Michael Kemmer.
The industry group, historically focused on domestic lobbying as well as managing Germany’s deposit protection fund, would have to change to accommodate the foreign banks. “We want to expand our activities for foreign banks,” acknowledged BdB’s Mr. Ossig. “Banks that are just coming to Frankfurt or expanding their business have different needs. We’re currently working on a concept.”
Mr. Ossig, who took office at the beginning of the year along with co-chief executive Andreas Krautscheid, knows what foreign banks in Germany need. Prior to joining the BdB in 2016 he was managing director at the Frankfurt offices of Royal Bank of Scotland and Bank of America.
The chairman of the VAB, Stefan Winter from UBS, reportedly will meet with Mr. Peters in Hamburg at the end of the month for talks on cooperation. Whether that will lead to a merger remains to be seen. “There haven’t been any talks yet,” Mr. Winter told Handelsblatt regarding a possible merger. “But we are already working together in a few areas.” He said he is open to discussion, but noted that the interests of the two groups are different. Also, a merger could be sensitive for the staffs of the two associations as well as the members.
While the BdB, with a staff of 160, works primarily on lobbying at its Berlin headquarters, the Frankfurt-based VAB, with a staff of just 10, primarily advises foreign banks on things like German taxes or licenses from supervisory authorities.
Many international banks are planning to relocate their European headquarters to Frankfurt and beef up their presence. Most will eventually have assets exceeding the €30 billion ($36 billion) that will put them under the supervision of the European Central Bank, their new neighbor in Frankfurt. Mr. Winter said assets of the VAB members will double in the medium term to €800 billion.
Daniel Schäfer and Robert Landgraf cover finance for Handelsblatt. Darrell Delamaide, a Handelsblatt Global editor in Washington, DC, adapted this story into English. To contact the authors: [email protected] and [email protected].