German Savings Banks Won’t Cut Jobs Like Deutsche Bank
Germany’s savings banks, which employ almost a quarter of a million people, won’t fire staff as they continue collecting deposits and lend to industry, said Georg Fahrenschon, head of a group representing the 423 lenders.
“Banks need to refocus on old, basic functions,” Fahrenschon said at a conference in Berlin today. They should refrain from investing swathes of cash in international markets or transferring funds to ailing units abroad, he said.
Deutsche Bank AG and Commerzbank AG, Germany’s biggest banks, have announced cost-cutting measures, including reductions in staffing, after the financial crisis hurt their profitability. While Frankfurt-based Commerzbank got an 18.2 billion-euro ($24 billion) bailout in 2009, none of the country’s savings banks, which tend to confine their operations to certain regions, applied for government money.
Savings banks employed 245,969 people in Germany at the end of 2011, according to Fahrenschon’s association, known as DSGV. They account for 43 percent of all lending to the German Mittelstand, the small and medium-sized companies that power Germany’s economy, the association says on its website.
Persistently low interest rates may prompt banks to change their business models, Renate Braun, chief executive officer of Sparkasse Passau, a savings bank based in Passau, a German town of about 50,000 people bordering Austria, said at the conference.
“We are adjusting our costs basis and trying to increase provision income,” Braun said. The bank has pushed up its fees for current accounts “substantially,” she said.
Fahrenschon said banks should focus on quality of service to attract new account-holders rather than offering signing-on bonuses.
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