German Banks: Structural Challenges and Economic Headwinds Could Pave the Way for More Banking Consolidation

Morningstar DBRS has released a commentary on the consolidation process in the German banking sector.

Key highlights include:

-- The German banking sector remains amongst the most fragmented markets in Europe despite some consolidation efforts.
-- The highly decentralised savings and cooperative banks have been driving the consolidation process in the country.
-- The ongoing weakening of the German economy could pave the way for further banking consolidation.

"Despite some consolidation efforts, Germany's banking sector remains the most fragmented among the EU economies, with about 17 banks per million inhabitants compared to France's 10, Italy's seven and Spain's five." said Borja Barragán, Assistant Vice President, European Financial Institution Ratings at Morningstar DBRS. "As Germany is currently facing structural and economic challenges, the pressure to become more efficient and digital oriented will likely push for more simplification and consolidation." added Nicola De Caro, Senior Vice President & Team Lead, European Financial Institution Ratings at Morningstar DBRS.