Private Banking: German banks try to keep hold of local relationships

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Private Banking: German banks try to keep hold of local relationships

Germany is the European market that most excites foreign banks seeking new wealth management business. But a few local players still dominate a market that should be ripe for internationalization. Mark Brown reports.

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Fairly or unfairly, Germans enjoy a reputation for chauvinism. It certainly appears that when they choose their private wealth managers, German clients instinctively opt for a well-known local name. And local doesn’t always stretch to mean German.

“We have a Hamburg market, a Cologne-Düsseldorf market, a Frankfurt market and a Munich market,” says Klaus Kirchmayr, a partner at Zurich-based consultancy Millenium Associates. “If you are in Cologne, it’s prestigious to be a client of Sal Oppenheim. If you are in Hamburg, you have an affinity with MM Warburg or Berenberg Bank.”

But away from the biggest urban centres, wealthy Germans have gravitated towards the best-known national players. This has concentrated wealth management in comparatively few hands.

“Germany is very different to other markets where there might be more than 100 viable private banks,” says Sebastian Dovey, managing partner at wealth management consultants Scorpio Partnership. “German private clients are predominantly in favour of working with German institutions and predominantly choose ‘big is best’.”

The net impression until now has been one of inertia. In Euromoney’s inaugural private bank survey in 2004, Deutsche Bank Private Wealth Management (DB PWM) emerged as the leading private bank in Germany, with Sal Oppenheim second.

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