As German savings banks looks set to acquire chunks of
the embattled Landesbanken sector, Fred Crawley asks if Deutsche
Leasing will take an even greater share of the German leasing
pie.
Go deeper with GlobalData
Germany’s public banking system
funds the majority of leasing done outside the captive finance
sector, and has won international acclaim for the performance of
its ultra-low-risk network of Sparkassen (local savings banks).
Germany’s 438 Sparkassen have an asset base of
more than €1 trillion, and reported more than €1 billion in profits
for 2008, without changing their business model in the
slightest.
But the Sparkassen have difficult siblings:
the Landesbanken. These large regional public banks, originally set
up to carry Sparkassen banking onto an international stage, now
face consolidation after a year of €5.8 billion losses. As such,
the Landesbanken are under pressure to cut asset bases, including
€50 billion in lease portfolios (see box below).
The Deutscher Sparkassen und Giroverband
(DSGV), representing both Sparkassen and Landesbanken, considers
the Landesbank-owned leasing businesses to be sound, but supports
the consolidation of Germany’s seven Landesbanken into two or three
entities. As this happens, leasing companies will likely be
sold.
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By GlobalDataWhereas purchases from outside the group will
be possible, sales of leasing business to other areas of the DSGV
seem more likely given the almost unparalleled liquidity available
to the Sparkassen and the group’s historical preference for
internal mergers and acquisitions.
If, or when, the mergers begin, the
Sparkassen, formerly seen as “strange and conservative” compared to
Germany’s commercial banks (in the words of DSGV president Heinrich
Haasis), may acquire a greatly enhanced leasing operation.
The company under the spotlight is the
Deutsche Leasing Group (DL), which came into the DSGV in 1972 under
the ownership of 12 of the Sparkassen. Today, it is said to be
looking into acquiring Landesbank-owned leasing businesses.
It certainly appears to have the financial
clout to achieve this. Shares in DL were spread among 50 savings
banks by 1998, and today the company is owned through individual
stakes held by some 400 local savings banks. The low-risk, local
strategy of the Sparkassen is reflected in DL – as is its success.
DL, known for SME plant and machinery finance, reported new
business volume up 15 percent year-on-year to reach €9 billion in
its last fiscal report, and profit up from €104 million to €131
million.
DL has also made such acquisitions before. In
2004, it purchased from the Landesbank HSH Nordbank a 60 percent
stake in real estate and big ticket specialist DAL Group. The
controlling share means that DAL now contributes around €12 billion
to DL’s overall managed asset portfolio of €31 billion.
The remaining 40 percent of DAL is still owned
by HSH Nordbank, which has suffered more heavily than any
Landesbank during the credit crunch and has been under pressure
from major stakeholders in Hamburg and the state of
Schleswig-Holstein to cut its asset base. Part of its response was
to halt refinancing of lease portfolios to independent lessors
across Germany at the end of 2008, resulting in a considerable
funding gap for many firms. Now, HSH Nordbank is understood to be
planning the sale of its remaining leasing business, including its
stake in DAL.
Would Deutsche Leasing be interested in total
ownership of DAL? According to a spokesperson for the company it is
a “possibility”. However, the same spokesperson made it very clear
that: “We cannot speculate about the role of Deutsche Leasing, in
this context.”
The next most likely move would be a
transferral of part of the Landesbank Baden-Württemberg leasing
empire into the hands of the Sparkassen, presumably through
Deutsche Leasing.
When this was put to a spokesperson from LBBW,
the response was as follows: “We are in the midst of a
restructuring process, and as such we might sell some subsidiaries,
including leasing business. However, as we are awaiting a decision
by the EU Competition Commission, we can’t say exactly what will
happen to them.”
In a market known for being fragmented, DL is
the largest non-captive player by far. Even with just a portion of
the leasing business owned by LBBW under its belt, it would grow to
rival even the BNP Paribas-Fortis entity in size.
Landesbank-owned leasing businesses
|
Owned by |
new business 2007 (€m) |
new business 2008 (€m) |
% change y-o-y |
last reported portfolio (€m) |
|
|
Deutsche Leasing |
100% Sparkassen |
6,200 |
7,100 |
15 |
14,200 |
|
SüdLeasing |
94% LBBW Leasing |
2,340 |
2,064 |
-12 |
8,354 |
|
DAL-Gruppe |
60% Deutsche Leasing |
1,614 |
1,936 |
20 |
12,965 |
|
LHI |
6% Norddeutsche Landesbank |
1,071 |
1,861 |
74 |
21,240 |
|
MMV-Leasing |
100% Landesbank Baden-Württemberg |
542 |
532 |
-2 |
1,593 |
|
HL Hannover Leasing |
75% Helaba Landesbank |
2,549 |
534 |
-79 |
1,4186 |
|
KGAL (45 % portion held by Sparkassen) |
15% Hamburg Sparkasse |
1,508 |
638 |
-58 |
10,513 |
|
Source: Leasing Life |
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