A Drowning Giant Seeks Help

More business, more problems for DWP. Source: Action Press
Less business, more problems for DWP.
  • Why it matters

    Why it matters

    DWP-Bank handles brokerage services for most of Germany’s cooperative and savings banks.

  • Facts


    • DWP Bank processed 21 million securities transactions in 2013 alone.
    • The German Federal Financial Supervisory Authority rated the DWP-Bank as systemically relevant.
    • Germans have turned away from the stock market.
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Financial quiz time: What is the name of the bank with the greatest number of investment portfolios in Germany? The answer: Deutsche Wertpapier Service Bank, or DWP-Bank for short.

Once a year, customers of the country’s cooperative banks, most of its savings banks, and more than 30 private financial institutions get a brokerage statement. It may look like it’s coming from their own bank, but really it comes from DWP.

In 2013 alone, more than 21 million securities transactions were processed through the unknown banking giant. It is the market leader in Germany in securities processing, with 440 direct clients, 1,500 affiliated German banks, and about 5.3 million managed portfolios. The German financial regulator BaFin has rated DWP-Bank as systemically relevant.

But size alone does not guarantee success. The bank is facing major problems and is now seeking help in the form of an alliance with DekaBank, the central asset manager for the more than 400 local savings banks spread across Germany.

A slump in its core business, failed expansion dreams, and management board members being fired have meant tough times for DWP in recent years. Fifty percent of the institution belongs to the cooperative DZ Bank. The other half is owned by a handfull of Germany’s savings banks, or Sparkassen, each with their own interests. It is this half that may fall into DekaBank’s hands, according to financial sources.

The problems at DWP are chronic, but not all home-grown. Germans have become wary of investing in the stock market – the number of processed transactions recently was down almost a quarter from the level from 2011. Though the benchmark DAX stock index in Frankfurt has continued to reach new record highs, more and more people have in fact turned their backs on equities.

By the end of 2013, a mere 8.9 million Germans held stocks or mutual funds – which was 600,000 fewer investors than a year earlier. As a result, fewer securities had to be managed and coffered, meaning that fewer required the DWP to take care of paying interest or dividends.

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