The German financial sector: Backbone of the Economy, at home and abroad

Germany has the largest and most stable economy in Europe. Its financial industry is an integral part of the euro ecosystem and a gateway to the EU-28.

We will do everything possible in order to create attractive conditions for Germany as a financial centre,

Chancellor Angela Merkel

Germany is a great place to do business, in the financial sector and beyond

Top 5

According to the World Economic Forum Germany is rated in the top 5 worldwide for quality of infrastructure.

Stable labor costs

According to a 2018 Eurostat report, German labor costs are some of the most stable in Europe.

Labor productivity

As of 2017, Germany ranked in the top 5 in Europe for labor productivity.

FDI

Due to attractive conditions, Germany has over EUR 700 billion of FDI.

Germany’s financial sector is world-renowned

SME economy

A high demand for financial services ensures a healthy market, due in part to the German SME economy (known as the Mittelstand).

Partner and facilitator

The financial industry acts as a partner to of the real economy.

AAA rating

The German financial sector is an internationally recognised, attractive market with a very good financial infrastructure and an AAA rating.

Proven structure

BaFin and the Deutsche Bundesbank provide proven structure, reliability and security.

Financial and insurance activities contributed EUR 122.6 billion to the German GDP. They are part of the service sector which accounts for about 70 percent of the German GDP. 

There were 1,823 credit institutions active in Germany in 2017. The banking sector has a workforce of nearly 600,000. The total assets of the German banking industry amounted to EUR 7,927 billion in 2017. 

Germany’s banking sector is varied, offering much more than just private banks. Along with public banks – Germany’s decentralised network of independent regional commercial and savings banks – German cooperative banks contribute to a diversified banking landscape. Germany’s banks themselves are also diversified, supported by the country’s renowned universal banking system.

According to the Global Financial Centres Index (GFCI) Frankfurt is a leading European financial centre

Global relevance

Frankfurt is ranked 10th in the world.

Significant

Frankfurt is listed as the 3rd most significant financial centre in Europe for 2019.

Development

Frankfurt is no. 3 in the GFCI list of global financial centres likely to become more significant.

European leaders

Frankfurt is listed right behind only London and Zurich.

Frankfurt is not only a prominent financial centre in Europe and beyond – it’s also a source of financial stability. A point of contact for all 28 EU member states, Frankfurt’s network of 199 banks, 7,900 financial service companies, 34 higher education institutions, and numerous supervisory bodies places the city in a unique leadership role. Its 100,000-strong workforce in the financial industry fuels growth, and is highly international, with people from almost 200 countries.

Frankfurt is the centre for euro clearing for banks from non-euro countries. Eurex is the leading derivatives market in Europe and Eurex Clearing serves more than 175 clearing members in 17 countries and administers a collateral pool accounting for around EUR 50 billion. Frankfurt is also the location in the EU for renminbi clearing.

The German financial sector benefits from investment opportunities in the multifaceted and robust insurance and reinsurance sectors.

Alongside banking, Germany’s insurance industry leads both in Europe and globally. The industry is healthy, with EUR 88 million in life insurance contracts, 71 million in pensions, 17 million in risk coverage, and 25 million in supplementary contracts, along with a robust private insurance market, with 9 million people covered by private health insurance.

Germany’s insurance market is the second-largest insurance market, alongside France, in Europe

Share of global premium income in primary insurance in percent:

Germany dominates the reinsurance sector in Europe and is the second largest reinsurance market in the world

Share of global premium income in reinsurance policies in percent:

The German insurance industry benefits from its diversification:

Germany offers ideal conditions to investors in private equity

According to PwC, Germany is “arguably the most attractive destination for private equity investment in Europe.”

Private equity in Germany: A growing market

Investments

Approximately 300 associated companies invest in 1,100+ German companies every year.

Portfolio management

5,000+ companies are managed in portfolios.

Attractive location

71 percent viewed Germany favourably as a private equity investment location, compared to other countries.

Growth

In 2018, PE investment reached EUR 9.6 billion with investments in 1,122 companies.

Leaders in private equity investment

Investment volume in 2018 per region in EUR millions:

Private equity funds several sectors all over Germany

Investment volume in percent:

Venture capital plays a decisive role for innovative companies and for the future of Germany as a business location.

Federal Minister for Economic Affairs and Energy Peter Altmaier at the 20th German Equity Day

A great location for FDI

Germany: An ideal place for foreign investment

Stable location

Political stability and predictability distinguish Germany as well as its location between market centres in the US and Asia.

Passporting

EU-passporting in the financial industries for easy access up to the 28 member states.

Framework

Germany has the largest GDP in Europe, plus a skilled workforce, due to dual education system.

Living standards

5 german cities in the top ten worldwide for quality of life.

Germany’s financial industry is trusted throughout Europe, with high certification standards managed by BaFin, the Federal Financial Supervisory Authority. BaFin supports the function and integrity of the German financial system, supervising more than 1,600 banks, 700 financial services institutions, 500 insurance companies, 6,000 domestic investment funds, and numerous other organisations and institutions (as of Dec. 2017). Overall, BaFin maintains trust in the German financial system.

European FDI leader

Development of FDI projects in financial services in Europe (by number, 2010-2018)
Business and financial services accounts for 15 percent of FDI in Germany, with significant investments coming from the UK, France and the Netherlands.
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Germany is an excellent location for investment and trade in the financial industry–whether in banking, insurance, private equity, clearing or FinTech sectors, among others. A solid, educated workforce, openness to foreign collaboration, along with stable regulation paired with groundbreaking innovation make Germany the choice for forward-thinking financial leaders, both in Europe and beyond.