German banks continued to dominate the Luxembourg market in 2013, with 22 subsidiaries and 15 branch offices. However, consolidation in the sector has shown no sign of subsiding.

“The move towards greater consolidation, which has surfaced in recent years, has continued unabated in 2013 and well into 2014. The fact that many banks are selling, restructuring, merging or closing lines of business is a clear indication of the ongoing upheaval within the sector,” says Björn Ebert, Audit partner in charge of the publication at PwC Luxembourg. “Through their continuous efforts, German banks should ensure sustainable growth.”

Four main trends can be highlighted as regards the German banking sector in 2013:
“On the one hand, banks have consolidated their business models, particularly in private banking. On the other hand, certain lines of business have been transferred from subsidiaries to existing or newly created branches, which are subject to less stringent regulatory requirements in terms of capital adequacy and reporting obligations. Moreover, many banks have continued to reduce risk assets, leading to considerably lower overall balance sheet results. Net interest income has also dropped by 21.1%, partly due to weak interest rates that lead to lower earnings from maturity transformation,” explains Jörg Ackermann, Advisory partner and responsible for German financial sector clients at PwC Luxembourg.

Based on the figures at hand, the CSSF has pointed in its annual report to a slight drop in earnings across Luxembourg banks in general, but a very different picture emerges for the German market sector. The latter’s annual results decreased by 43.9% to EUR 519.8 million.

The report also highlights the areas in which differences were noted between German subsidiaries and the Luxembourg banking sector in general, and provides comparisons with last year’s results. This is complemented by extensive data tables comprising the overall balance sheet and profit and loss results for German subsidiaries, indicators and key balance sheet data, as well as a ranking of German subsidiaries according to total balance sheet, own funds, annual results and headcount.

The report  Auswertung der Jahresabschlüsse 2013 der deutschen Eurobanken in Luxemburg is available on PwC Luxembourg website.