The S-Group Business, Private Customers and SME Business segment encompasses S-Group business with Sparkassen, Frankfurter Sparkasse's retail business, Landesbausparkasse Hessen-Thüringen (LBS) and the wealth management services provided by Frankfurter Bankgesellschaft.
Helaba's S-Group strategy is founded on the institutional and commercial bond it shares with its customers, owners and partners the Sparkassen. As a leading S-Group bank with sales operations spanning the whole of Germany, Helaba aims to provide meaningful and sustainable support to the Sparkassen to help them master the challenges they face in the market. Helaba acts always as a partner and never as a competitor. It offers the Sparkassen nationwide assistance, a demand-led range of products, joint marketing and continuous dialogue in numerous S-Group boards and committees. Virtually all of Germany's Sparkassen work with Helaba in at least one business area.
Helaba's tight integration with the Sparkassen in the core regions of Hesse, Thuringia, North Rhine-Westphalia and Brandenburg is reflected in the joint clearing house process as well as in the very successful collaboration achieved in the S-Group boards and committees. The product utilisation rates excluding trading business range between 60 % and 80 % in all three core regions. S-Group ratios in proprietary business are quite low due to the intense terms-based competition typical of trading business.
Helaba designs its sales concepts with the objective of assisting the Sparkassen in relation to the regulatory, business administration, sales support and technical challenges before them. Examples include the Helaba Themenwelten concept, the Asset AllocationPlus strategic consulting concept, syndication options and the Bank's digitalisation and OSPlus activities. Helaba also provides a central information and communication platform known as the SPARKASSENPortal.
These cross-product services are complemented by innovative product propositions conceived in response to the challenges of operating in an age of particularly low interest rates and high liquidity: Helaba assists the Sparkassen with Asset AllocationPlus counselling, the Helaba Anleihen Portfolio, Helaba Anlage Indikator and Helaba Invest's comprehensive offer in the areas of special funds, real estate funds and public funds.
Helaba has sharpened up its proposition in corporate customer business. It has tweaked the strategic focus of co-operation with a new modular sales support offering and devised a programme to standardise co-operation agreements in corporate loans business nationwide, giving it an even better starting point for sales activities in the corporate customer segment (UnternehmenskundenPlus). The strength of Helaba's position in the market enables it to offer the Sparkassen an extensive range of ways to make more of their market potential in international business as well. The Bank managed to maintain the established very high level of development loans business in Hesse and Thuringia.
Sparkassen competing for the attention of discerning customers need the edge conferred by a properly differentiated product range in private customer business too. Helaba assists them in this respect with a demand-led line-up in certificates business, the Helaba DEPOTMASTER, and in the form of help mastering the pertinent regulatory requirements. The Bank's Helaba Anleihen-Portfolio provides a tool that takes account of investors' pursuit of the magical triangle of financial investment: return, safety and availability. Helaba has increased the scale of foreign notes and coins and precious metals trading within the S-Group enormously as part of a dedicated sales offensive. Customers are able to order foreign notes and coins and precious metals via the Sparkassen using the internet branch.
The market environment for proprietary business increasingly leaves Sparkassen with a considerable challenge on their hands in terms of investment management. Helaba's Asset AllocationPlus strategic consulting concept aims to help Sparkassen optimise their risk-return profile at the whole-bank level. Credit risk diversification instrument S-KB XIII KLASSIK, the largest loan basket to date with a volume of € 676 m and involving 77 Sparkassen and 330 counterparties, launched in November 2016. Helaba additionally offers the S-Group Sparkassen securities lending options and the ability to transfer cover assets under a Pfandbrief cover pooling arrangement to generate additional returns.
Frankfurter Sparkasse is the leading retail bank for private customers and SME corporate customers in the Rhine-Main region. A wholly-owned and fully consolidated subsidiary of Helaba, it has total assets of € 18 bn and a headcount of 1,785 people, making it the fifth largest German Sparkasse. A regional full-service bank, Frankfurter Sparkasse provides a comprehensive range of financial services for private and corporate customers alike and, with 80 branches and advice centres, operates the densest sales network in the region. It has been active in the direct banking sector since 1996 in the form of 1822direkt.
Frankfurter Sparkasse reported net income for the year of € 45 m in 2016. The total capital ratio exceeded the required 8 % level at all times. Demand in primary lending business focused, as in previous years, on real estate finance. Although the new residential property credit directive unsettled the market and gave cause to anticipate a reduction in lending, the value of payments issued in the residential construction sector ended up just short of 6 % higher than the already unusually high figure for the previous year. Customers deposited € 568 m of new funds with the Sparkasse. Short-term investments remained their preferred option, although securities transactions also increased noticeably. Customer business grew to become an even more significant element of the balance sheet structure: loans and advances to customers make up the largest item on the assets side, while customer deposits dominate on the liabilities side.
Frankfurter Sparkasse offers its customers an ever greater selection of payment methods. All customers have been able to enjoy highly secure payments for internet purchases using paydirekt since April and Frankfurter Sparkasse has also been supporting a field test for Blue Code, which allows payment by smartphone in all of the catering outlets operated by Studentenwerk Frankfurt am Main, since November.
The high quality of Frankfurter Sparkasse's advice and counselling earned it a number of accolades, with the home finance counselling service, 1822 Private Banking and 1822direkt each achieving top rankings in relevant tests.
Frankfurter Sparkasse received a certificate recognising its family-friendly HR policies as determined in the audit berufundfamilie process from German Federal Minister of Family Affairs Manuela Schwesig in June. Frankfurter Sparkasse took on 37 new trainees in August 2016, meaning that it remains the largest provider of training leading to the qualified bank officer qualification in the Frankfurt am Main Chamber of Commerce and Industry region.
Landesbausparkasse (LBS) Hessen-Thüringen is a regional company specialising in home loan and savings business and real estate finance. Its home loan and savings contract is a key product through which Sparkassen are able to attract young customers and establish a lasting relationship with them. Traditional home savings loans, which require the borrower to save for a period before accessing the funds to be loaned, remain popular but here is also increasing demand for up-front loans with very long terms. Combined with the new generation of home loan and savings tariffs, these provide protection against interest rate fluctuations until full repayment. Municipal authorities and their corporations are increasingly looking to finance activities through the municipal home loan and savings contract. LBS markets its products through its own field service and jointly with the Sparkassen in their territories.
The course of new business at LBS in 2016 reflected the wider market trend, falling back slightly from the high level seen in the previous year. The entire sector is now focusing very largely on financing tariffs only: savings interest rates are irrelevant in the current climate. This has put the principal advantage of home loan and savings products – protection against interest rate fluctuations and an inexpensive loan – centre stage once more, helping LBS to generate a sustaining volume of new business again in the year under review.
Government support programmes are also helping to maintain demand for traditional home loan and savings products. The Wohnungsbauprämie employee savings bonus and the Arbeitnehmersparzulage, a subsidy paid on savings to be used for the construction, purchase or improvement of residential real estate, supply an additional incentive for young people not to put off thinking about accumulating capital, purchasing real estate and providing for their retirement and the combined effect of bonuses and tax savings can often make financing under the Wohn-Riester state subsidy programme for private old-age provision a cheaper option by several tens of thousands of euros.
LBS still sees very substantial untapped potential in financing business. It intends to work with the Sparkassen to service those segments of the market in which its products have most to offer – locked-in very long term interest rates, finance under the Wohn-Riester scheme and modernisation projects – even more intensively. LBS is pursuing all available optimisation approaches during the ongoing phase of extremely low interest rates to ensure its performance and capabilities continue to improve.
Frankfurter Bankgesellschaft continued to consolidate its position as the private bank for the Sparkassen-Finanzgruppe in 2016. It now has co-operation agreements in place with over 50 % of Sparkassen concerning the acquisition and support of high net worth private customers with € 1 m or more to invest. The Frankfurter Bankgesellschaft group includes subsidiary Frankfurter Bankgesellschaft (Deutschland) AG, fund manager LB(Swiss) Investment AG and the only multi-family office available to all German Sparkassen as well as the parent company, Frankfurter Bankgesellschaft (Schweiz) AG.
The group grew its investment volume by approximately € 1 bn to € 10 bn in the year under review. This makes the Frankfurter Bankgesellschaft group one of the ten largest private banks in Germany and one of the two largest German-owned banks in Switzerland. Multiple quality awards presented by independent assessment bodies in 2016 constitute a strong foundation for further growth. The performance test of actual portfolios conducted by publishers FUCHSBRIEFE, which has now been running for six years, once again rated Frankfurter Bankgesellschaft the best Swiss private/commercial bank. One annual test covering all German-language banks identified Frankfurter Bankgesellschaft as the second best Swiss bank. New service propositions in asset management for the Sparkassen on the ground should allow the Sparkassen-Finanzgruppe to make further inroads into the market in the high-net-worth customers segment and deliver additional gains in fee and commission income both for the Sparkassen and for Frankfurter Bankgesellschaft.