Lobbying clampdown Banking on Brussels

Big financial institutions such as Deutsche Bank spend a fortune trying to influence E.U. decision makers, but new regulations may restrict their unfettered lobbying.
Do think four million is enough, Jürgen?

Once a year, Deutsche Bank issues invitations to a classy reception in the European Union’s capital Brussels. The event’s goal is “to facilitate dialogue” with E.U. officials and institutions, according to the bank's official lobbying record.

Cultivating the political landscape is high on the agenda of most financial institutions. But particularly in Brussels, where much is at stake for large banks. That’s because the E.U. legislative and executive branches are making decisions about projects of central importance for the financial industry’s big players.

A new regulation requires for the first time that financial institutions reveal how much money they actually spend on their E.U. activities. For Deutsche Bank, that comes to almost €4 million ($4.46 million) — more than four times as much as Commerzbank and two-and-a-half times the amount spent by Europe's largest bank, HSBC. U.S. competitors spent a maximum of €1 million.

“For many years now, Deutsche Bank has adhered to the particularly strict transparency regulations of the Federation of Germany Industries and the Confederation of German Employers' Associations regarding the representation of political interests,” a bank representative said. Deutsche Bank’s activities in Brussels go beyond pure lobbying and include, for example, professional programs, the spokesperson said.

For Deutsche Bank, decisions made in Brussels can have far-reaching consequences. The German global banking and financial services company is planning an extensive restructuring. The firm’s two chief executives, Anshu Jain and Jürgen Fitschen, want to spin off its retail bank Postbank, close almost a quarter of Deutsche Bank branches and achieve significant savings in investment banking.

One of the most important reasons for the drastic measures is increasingly tough capital requirements.

The lobbying activities of large companies has increased continuously in Brussels. Sven Giegold, German MEP for the Green Party

A few days ago, the E.U. commissioner for financial affairs, Jonathan Hill, hinted to Handelsblatt that the European Commission might introduce a compulsory debt limit for large banks. Mr. Hill is also pushing a controversial legislative proposal: It focuses on whether and how large banks could create firewalls between their most risky activities and the rest of their business.

Financial industry representatives in Brussels aren’t surprised about Deutsche Bank’s massive lobbying. “The work of associations can't replace the lobbying of individual institutions, because as a rule associations stand for compromises,” a representative said.

Large banks often have different priorities to those of smaller institutions, whose interests are represented by groups such as the Association of German Banks.

The new regulations regarding transparency require that companies reveal all expenses incurred for political activities regarding the European Union, including contributions to associations, rent payments and personnel expenses. Previously, only expenses for pure lobbying had to be divulged.

Thus, Deutsche Bank’s E.U. activities have doubled from about €2 million to almost €4 million. U.S. investment bank Goldman Sachs increased its declaration of expenses fourteen-fold.

The new regulations stipulate that European commissioners and their high-level colleagues can meet only with lobbyists listed in the transparency register. Since the beginning of this year, Deutsche Bank lobbyists have met once with Mr. Hill, records show. The bankers sat two times with members of Mr. Hill's cabinet.

The Cologne-based nonprofit organization LobbyControl, however, considers the new rules still to be insufficient. “Transparency must be extended to the bureaucratic apparatus and the European Parliament,” said Nina Katzemich, the group’s E.U. expert.

Sven Giegold, a German member of the European Parliament for the Green Party, agrees. “The lobbying registry should also apply to the European Parliament, because its members number among the most important target groups of lobbyists,” he said. “The lobbying activities of large companies has increased continuously in Brussels.”


Michael Maisch and Thomas Ludwig cover banks for Handelsblatt. To contact them: [email protected] and [email protected]