Not Your Grandmother's Bank

Berenberg Bank's increasingly risky business

06202453 Berenberg 1788 bw
Modern banking at an institute with roots dating back to 1590. Source: Company

Berenberg Bank, based in Hamburg, is regarded as the last of Germany’s venerable, private banks. Founded in 1590, it is the second-oldest bank in the world, with a long tradition of catering to wealthy clients. However, in recent years, the bank’s business has veered away from its traditional business toward a focus on riskier investment banking. The shift has raised questions about the sustainability of its growth model and whether the privately-owned bank has at times skirted regulations in an effort to boost profits.

Almost all of Berenberg’s key indicators show growth, but there are cracks behind the facade: investigations by the public prosecutor’s office, an exodus of long-standing employees from key positions, top managers reportedly working in isolation from each other and financial performance that is not as robust as may seem with only a cursory glance at the figures.

Berenberg’s transition to investment banking has been overseen by Hendrik Riehmer, a manager with a somewhat maverick reputation who oversees operations together with the 62-year-old Hans-Walter Peters. The two men, who jointly own a 26.1 percent stake in the bank, have a difficult relationship, people familiar with Hamburg’s finance sector said. An asset manager, who declined to be named, said he believed their fraught relationship is, in fact, a key risk to the entire bank. The two executives declined to comment.

Compounding what appears to be friction within the leadership ranks, the bank has lost a number of high-ranking managers of late, with some setting up their own asset management businesses and a couple of others joining Merck Finck & Co.

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