Savings & Moan

With Branches Increasingly Obsolete, German Banks Look to Downsize

Commerzbank wants to maintain most of its 1,200 local branches. Source: DAPD
Commerzbank wants to maintain most of its 1,200 local branches. HVB is taking a more radical approach.
  • Why it matters

    Why it matters

    HypoVereinsbank is cutting branches, Commerzbank is keeping them and trying to lure new customers. Only one will be prepared for banking’s digital future.

  • Facts


    • HVB plans to cut 1,500 jobs and cut or merge 240 branches by the end of 2015.
    • Commerzbank wants to keep most of its 1,200 branches.
    • Frankfurt-based Commerzbank is Germany’s second-largest bank. Munich-based HVB is the sixth-largest.
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In year 1327, no less than 43 branches of Italian banks were crammed into the French city of Avignon. It was probably the earliest example of what modern-day experts call “overbanking” – where there are too many credit institutions bunched together to make any money.

It took almost 700 years until the unbroken expansion of banking in Europe ended and the demise of local retail branches began. Some German banks, however, still don’t want to accept this fundamental fact – and it threatens their future.

Just how differently German banks are preparing for the future could be seen last week. HypoVereinsbank in Munich said that almost half of its network of branches would be eliminated – from 580 to 340. Commerzbank stressed it would maintain a large number of branches, currently 1,200. The bank’s argument: Despite digitalization, it continues to gain most customers through traditional bank branches.

If that’s true, Commerzbank might be winning the wrong kind of customers. The bank might actually pick up dissatisfied customers of rival banks who are angry over their longtime branches being closed. One of Commerzbank’s strategies is to offer extras to lure customers as competitors cut back. But that’s a short-term gain. In the long run, hanging on to a network of expensive branches simply won’t pay off.

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