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Germany
Merger-mania for the Landesbanks The debate on Landesbank mergers has heated up following two announcements in June. Firstly the take-over of the “Landesbank Berlin” by the German savings banks association (DSGV) Second the North-Rhine Westphalia state governments announced intention to sell its 38% stake in West LB. Continued margin pressure and the exhaustion of cost cutting potential will continue to speed up merger activity. A holding structure between various Landesbanks looks politically more feasible than an outright merger between the largest Landesbanks LBBW and West LB. Still, the diversity of the political interests of various state governments offers a chance - albeit of less than 50% - for a merger between the two Landesbanks as a first step.
Asset conclusions: overdue consolidation in the public banking sector makes savings banks and Landesbanks more compliant with market forces, helping the profitability of banks in general.