Share and Strength of Foreign Banks
In Germany since 1926, Citigroup claims it is a leader among German consumers in innovation, and offers exceptional service and technology in retail banking. “We are a preferred partner for global financial services among German companies and organizations. In the growing consumer banking business, we service retail clients in services including loans, credit cards and wealth management products at more than 330 locations. Customers have seven forms of access: Citigold centers, branches, ATM terminals, telephone, the Internet, TV shopping and our mobile advisors.
Citibank combines the advantages of a branch bank with the attractive prices of a direct bank. ” In corporate and investment banking, Citigroup serves the largest global corporations, insurance agencies and financial institutions, headquartered in Germany, and offer a wide range of products and services in corporate finance; cash, trade and treasury services; debt and equity capital markets; mergers and acquisitions; securities services; investments; financial products.
Citibank’s Global Investment Management and Private Banking business provides services such as investment and portfolio management, global wealth structuring and global retirement (www. citigroup. com/citigroup/global/deu. htm). International financial institutions have given a boost to competition and innovation, while, at the same time, capturing a growing share of the German banking market.
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The number of foreign banks in Germany jumped between 1985 and 1990 by around 50% and, thereafter, fluctuated only slightly from year to year to remain more or less stable throughout the 1990s. The number of domestic banks, on the other hand, has dropped by well over one-third since 1985, mainly because of the closures and mergers in the savings bank and cooperative bank sectors. Not only the number of international financial institutions but their volume of business too is growing over-proportionally.
Foreign banks’ total assets increased five-fold between 1985 and 1999, while domestic banks only managed to treble theirs. The share of business accounted for by foreign banks among all financial institutions increased from 3. 5 to 5. 3%. In 1999 foreign banks’ total assets rose by 23% against the previous year to DM 591 billion. Institutions from the European Economic Area (EEA) accounted for more than half of this figure, with US banks taking a 20% share and Swiss banks a 10% share of total assets. The US and European branches recorded the strongest growth.
These are completely or partly exempt from German supervision, being subject instead to home-country control, which gives them considerable cost advantages (Dirk Franke, Assistant Division Manager, Association of German Banks, Berlin; Article: “Foreign banks: a barometer of the German financial marketplace”, in Die Bank ITS, July 2002). Where Foreign Banks Fare Better In international payments, especially Euro Access Frankfurt (EAF), foreign banks have a market share of 53%, in terms of the number of participants, and 39%, in turnover.
In the case of the Eurex, foreign banks dominate, accounting for more than 70% share of total turnover. IPO business in 2000 shows that in a ranking, based on the number of mandates and size, two and five, respectively, foreign banks feature among the top ten leading institutions. Foreign banks, such as Goldman, UBS Warburg, Morgan Stanley, Salomon and BNP Paribas, were involved mainly in large internationally-placed issues, while domestic banks in IPOs of small and medium-sized businesses.
Foreign banks fare even better in handling mergers and acquisitions with a German connection. As far as the number of M & A mandates is concerned, seven of the ten leading institutions in 1999, were foreign banks, namely Goldman, Credit Suisse First Boston, Merrill Lynch, Morgan Stanley, JP Morgan, Warburg Dillon Read and Lehman Brothers. As for M & A volumes, no less than eight foreign banks made it into the top ten (Dirk Franke, 2002).