Financing the transformation
Düsseldorf is the leading financial location in NRW. Especially during the current war situation in Ukraine, the finance industry supports its customers closely. In the long term, it wants to pave the way to a more digital and sustainable world.
Dr. Andre Carls, Deputy Chairman of the North Rhine-Westphalia Banking Association and Member of the Management Board Private and Corporate Clients West at Commerzbank
In particular, companies with a business and local presence in Ukraine and Russia are currently (as of 15 March 2022, editor's note) preoccupied with many issues: How can employees be evacuated from the war zone as quickly and safely as possible? What does it mean when Russian banks are shut down by the SWIFT communication network and, for example, invoices and wages can no longer be paid? What options are there then? And what aid programmes can companies take advantage of to cushion economic damage? - These are just a few important questions. But even companies without direct involvement in the region are uncertain about what consequences they will face if, for example, raw materials such as gas, oil, coal or even food - Ukraine is one of the world's largest wheat exporters, for example - become scarce. “As events are changing on a daily basis right now and Russia's actions are hard to assess, our main advice to companies is: Get in touch with the trusted contacts at your local bank and get in-depth advice on how best to deal with the situation on an individual basis and, if necessary, reduce risks!”, says Dr Andre Carls, Deputy Chairman of the NRW Banking Association and Member of the Executive Board Private and Corporate Customers West at Commerzbank. The North Rhine-Westphalia Banking Association is the industry representation of private banks. Together with the cooperative banks and the public savings banks, they form the three pillars of the banking industry. “The German banking industry strongly condemns Russia's attack on Ukraine. We stand united at the side of the Federal Government and the European Union when it comes to sanctions. Aggression in violation of international law and the invasion of a country must not remain without consequences in the 21st century. People have a right to live in freedom and democracy. Our thoughts are with the people in Ukraine,” adds Dr. Carls.
The importance of a united front and coordinated action, and the decisive role played by the finance industry in this, is particularly evident in North Rhine-Westphalia. Not only do about 18 million people live here, including about 5,000 millionaires, but there are also 755,000 companies, about 20,000 foreign companies - and a quarter of the German world market leaders. So there are a lot of (potential) customers for the financial sector. Düsseldorf alone is home to more than 250 financial institutions with around 20,000 employees, numerous industry associations ensure networking among themselves, academic institutions train the relevant talent and the Düsseldorf stock exchange functions as a national trading centre. The international importance of Düsseldorf is also shown by the many foreign representative offices that want to be local contacts (see info box).
The established major banks, regional banks, private bankers, private equity and venture capital companies as well as leasing and factoring companies are joined by a growing number of FinTechs that are driving the digitalisation of the industry (see page 20). The increase in technological innovators also documents the change that Düsseldorf as a finance location has undergone in recent years. This change was also marked by another major milestone in 2012: West LB, once Germany's third-largest bank, was split up at that time. The Düsseldorf Stock Exchange has also repositioned itself for competition: By means of the overarching cooperation with the Hamburg and Hanover stock exchanges in 2017, it has expanded its market position (see interview box).
Even if the current global political events surrounding the Ukraine war will take up many resources of this strong network for an unforeseeable period of time, the most important issue for the future must not be lost from view: the financing of social transformation. Because the departure into an even more sustainable and digital world costs NRW businesses an additional 80 billion euros per year, as calculated by the Institute of the German Economy. “It will not be possible to meet this huge investment demand with traditional lending business and traditional development programmes alone. Equity-strengthening measures via the capital market, but also other forms of financing such as private equity or securitisation will be important instruments,” explains Dr. Carls.
And because it is well known that more can be achieved by joining forces, a new platform has been developed in recent months under the auspices of the NRW Ministry of Economic Affairs: Fin.Connect.NRW. Together, players from politics, the credit and insurance industry and academia intend to find out: How can NRW businesses be supported in their transformation with more money and expertise? This kind of cooperation is unique in Germany so far - which underlines the determination of those involved. “For NRW in particular, this transformation offers a huge opportunity for growth and competitiveness. It is good that we are getting involved here so early,” says Dr. Carls.
The banks themselves are also striving to become even more digital and sustainable. The market for sustainable financial products, for example, recently grew at a double-digit rate. For example, the ECB is currently developing the digital euro together with the European banking industry, which is to be introduced in a few years. This is because the desire for digital money for faster and more efficient payment transactions is increasing, as can also be seen in the growing popularity of cryptocurrencies. In the case of the digital euro, appropriate regulation would then also be ensured behind it. “In the future, banks will have to be digital AND personal,” predicts Dr Carls. FinTechs and start-ups will work even more closely with established banks to achieve this. Innovative digital solutions, personal on-site advice and professional expertise thus go hand in hand.
Looking into the future is particularly difficult in view of the current situation in Ukraine. But some things can be built on: “Düsseldorf's economy is robust, we have very good location conditions and a good local finance network. At the same time, we have a strong international environment, cultural diversity and openness to the world. As a banking industry, we are now supporting companies even more closely and we want to be the transformation companion for a future worth living.” •
Düsseldorf as a financial location
• Around 250 financial institutions second highest density of financial institutions in Germany behind Frankfurt
• Home to important institutions such as the North Rhine-Westphalia Banking Association, the Rhine-
land Savings Banks and Giro Association, the Cooperative Association and the North Rhine-Westphalia headquarters of the Deutsche Bundesbank
• Good education in finance: Heinrich Heine University, Düsseldorf University of Applied Sciences,
FOM, EBC, Fresenius University of Applied Sciences, SRH Fernhochschule, WHU
• Headquarters of numerous foreign banks: e.g. MUFG Bank (Japan), Bank of China, Banque Europèenne
Credit Mutuel (France), Bank Julius Bär (Switzerland)
• Headquarters of, among others, NRW.Bank, Deutsche Apotheker- und Ärztebank, HSBC
Germany, IKB, Targobank, Sparda-Bank West and Stadtsparkasse Düsseldorf
• Growing number of successful FinTechs, e.g. A.IX Capital, auxmoney, Compeon, Vat4u
Words Tom Corrinth
Illustration iStock
Picture Commerzbank AG / Alexandra Lechner