Golf Club Kudos Won for Frankfurter Sparkasse in Deposits Grab

Investors outside Germany might never have heard of Frankfurter Sparkasse, yet in the country’s financial hub it leads the market for consumer banking ahead of Deutsche Bank AG (DBK) and Commerzbank AG. (CBK)

Chief executive Herbert Hans Gruentker says new clients have deposited cash at the savings bank’s 97 branches in and around Frankfurt since the financial crisis began in 2008, raising its profile. The lender has a 40 percent market share in consumer banking and a 25 percent share of corporate business, he said.

“Five years ago people would have looked at you in the golf club if you put your savings bank credit card on the table, now it’s just fine,” Gruentker, 57, said in an interview at his offices in the city. “Before the crisis we were judged to be boring banks, but now boring is interesting.”

Deutsche Bank slumped as much as 63 percent since Lehman Brothers Holdings Inc. collapsed in September 2008 and its executives became embroiled in legal scandals across the globe. Unlisted Frankfurter Sparkasse says it made a profit every quarter and kept collecting clients. Germany’s 423 savings banks pulled in 17.2 billion euros ($23 billion) of deposits since October 2009, more than nine times the 1.9 billion euros gained by Commerzbank and Deutsche Bank, according to Bundesbank data.

Frankfurter Sparkasse’s deposits grew to 13.9 billion euros at the end of 2011 from 12.9 billion euros in 2007. The number of consumer and business accounts at the lender expanded 7 percent to 276,000 in November from a year earlier, it said.

Business Model

“We have an easy to understand business model because we just collect deposits in the region and lend to businesses in the region,” Gruentker said. “People also like that because they can see that we do good things for their area and for society.”

Savings banks manage 42 percent of all German consumer deposits and almost four times more than the country’s largest retail banks combined, according to the Bundesbank. They’ve used their weight to lobby against the European Union’s joint liability plan for the continent’s lenders, saying it would put German depositors at risk of bailing out banks in countries such as Spain and Italy.

Savings banks have benefited from a “flight to stability,” said Gruentker.

Frankfurter Sparkasse was founded in 1816 with a mandate to support innovative ideas and to cater for the public interest, according to its website.

“We know our clients, both business and retail, personally,” he said. “That builds up trust on both sides --we know what they do and they know us.”

The lender’s private banking business, which caters for customers with 500,000 euros or more, grew to 3,000 clients at the end of last year from 2,000 before the financial crisis began, Gruentker said.

“For me this is a sign that clients no longer put their money in the big names only,” he said.

To contact the reporter on this story: Annette Weisbach in Frankfurt at aweisbach1@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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