Continued decline in number of credit institutions – significant number of further branch closures

After adjustment for special factors in 2021, the consolidation process in the German banking sector, which has been going on for many years now, continued in 2022. Over the course of the year, the overall number of credit institutions fell by 61 (160 in the previous year)¹[1]to 1,458. This was primarily attributable to 55 mergers, the majority of which were in the cooperative bank sector. 7 institutions returned their licences to conduct banking business and provide financial services, and 4 institutions had their authorisation revoked. 

The number of domestic branches fell significantly by almost 6% (around 10% in the previous year). As in 2021, the coronavirus pandemic and the concomitant increasing prevalence of online banking are likely to have had an accelerating effect. The thinning-out of the branch network can be observed in virtually all banking sectors.

Change in number of credit institutions

In 2022, there were only 5 additions and 66^[2]departures (174² in the previous year) across all credit institutions. Of these departures, 37 (2021: 45) were attributable to mergers in the cooperative sector. The number of cooperative institutions thus fell to 736, representing a drop of just under 5%. Having exceeded a size threshold, one “other institution” that was no longer classified as a credit institution in the credit cooperative sector in the previous year was reclassified as a CRR credit institution.^[3]3 

In the savings banks sector, mergers caused the number of institutions to fall by 9 (2021: 6), leaving 362 savings banks alongside 6 Landesbanken (the number of which did not change from the previous year). 

The number of commercial banks decreased again, by 15 institutions net to 246 in 2022; the most pronounced fall in the number of branches was in the “regional banks and other commercial banks” category, the number of which declined from 151 to 141 at the end of 2022. There was a single addition versus 11 departures; 5 of the departures were due to business operations being transferred following mergers, cross-border in some cases, 4 were in cases where licences were relinquished and 2 where licences were revoked. 

In the case of branches of foreign credit institutions, there were 3 additions versus 8 departures; 4 of the latter were where business operations were transferred as a result of mergers of foreign head offices. At the end of 2022, this group of banks still encompassed 102 institutions (107 in the previous year). It also comprises 3 big banks, as before.

In addition, mortgage banks saw one departure. 

Number of domestic branches down significantly again 

The number of domestic branches^4[4]fell significantly again in 2022, albeit not as sharply as in the previous year, by 1,266 or 5.8% to 20,446. The previous year had seen 2,388 branch closures (-9.9%). This development once again reflects the impact of digitalisation on distribution channels due to greater use of online banking as well as cost-cutting measures undertaken in a challenging competitive environment. 

A further net decline in the number of branches was observed in all sectors of the banking industry. 

Although not as strongly as in 2021, the number of big bank branches went down substantially again, by 318 to 3,719 (-7.9%). This figure represents 18.2% of the total number of branches. According to the plans published by the banks to date, this declining trend is set to continue. The regional banks’ branch network was cut by 59 branches, leaving 954.

All in all, commercial banks had reduced the number of their branches by 374 (2021: -1,279) to 4,825 by the end of 2022. This corresponds to an overall share of 23.6% – this was 23.9% one year earlier.

Branch numbers were also cut by 441 to 7,470 in the savings bank sector (including Landesbanken). However, with a share of 36.5%, this sector still has the largest number of domestic branches. 

In the cooperative sector, the number of branches fell by 416 to 6,894 in net terms (share of domestic branches: unchanged at 33.7%).

Slight decreases were likewise recorded again among building and loan associations, with the number of branches of private building and loan associations down by 18 to 762 and that of public building and loan associations declining by 16 to 443. The number of branches in the “Other” category (excluding building and loan associations) stood at 52 (see Table 2).

Slight decline in foreign branches and foreign subsidiaries

The number of subsidiaries of German banks⁵[5]domiciled abroad fell slightly by 79 to 77 at the end of 2022 (see Table 3), with both departures being subsidiaries of big banks. However, with 60 foreign subsidiaries, the big banks still account for the vast majority of the total figure. By comparison, the other categories are represented only to a minor extent (regional banks: 8 foreign subsidiaries, one major cooperative bank: 4, Landesbanken: 3). 

The number of branches of German credit institutions abroad fell slightly by 4 to 251 (down 1.6%). The 11 newly opened branches were unable to compensate for the closures of other branches (15 in total).

Nearly three-quarters of all foreign branches as well as almost one-half of foreign subsidiaries are located in Europe, mainly in EU Member States (see Table 3). As at year-end 2022, 19 foreign branches (2020: 22) and 5 foreign subsidiaries (unchanged from 2020) were still located in the United Kingdom, even almost two years after the completion of Brexit. 

Footnotes:

1.  In 2021, excluding special factors (due to the entry into force of the Investment Institutions Act, 71 institutions were no longer considered credit institutions and 43 UK branches were dissolved as a result of Brexit), there was a decline of 46 institutions.
2.  Of which 114 institutions due to special factors; see footnote 1.
3.  Article 4(1) of the CRR stipulates that investment firms with a balance sheet total of €30 billion or more are classified as CRR credit institutions (usually banks with authorisation to conduct deposit and credit business).
4. Branches pursuant to Section 24(1a) number 4 of the German Banking Act. Branches that only provide automated banking or financial services are not included here.
5. 5 Equity interest of more than 50% in a foreign credit institution.