Berenberg announces record results as expansion continues (as distributed in Germany)
- Net profit for the year up 9.8% to EUR 66.1 million
- Record level of net commission income up 13.5% to EUR 234.4 million
- Assets under management increase by 6.8% to EUR 30.1 billion
- Ranked second for IPOs and capital increases in Germany, Austria and Switzerland
Hamburg. Berenberg once again managed to overcome the difficult environment for banks in 2013. With its focus on consulting and services, the Hamburg-based private bank, which has offices in 17 locations in Europe, America and Asia, generated record net commission income and the best result in its 423-year history*.
“We have built up a very diversified business, with a focus on commission as a source of income in all four of our divisions,” explains Dr Hans-Walter Peters, spokesperson for the personally liable partners. The further expansion of its business enabled the Bank to increase its net commission income to a record high of EUR 234.4 million (previous year: EUR 206.4 million), while its other two sources of income (recurring net interest income of EUR 31.8 million [previous year: EUR 31.2 million] and net trading income of EUR 22.2 million [previous year: EUR 35.1 million]) are of secondary importance. “What is very pleasing is that we managed to increase our client commission in equity brokerage by 50%,” says Dr Peters.
“Berenberg sees itself as a responsible, independent advisor and service provider for its clients. This is the framework that we operate within, both for wealthy private investors and for companies and institutional investors. This structure offers many advantages, both on the client side, where we can serve entrepreneurial families – either as companies or as private clients – and in terms of resources, such as analysts,” explains Peters. With approximately 80 analysts, Berenberg currently has the second-largest stock analyst team of any German bank, assessing 500 companies across Europe.
In recent years, the Bank has made a name for itself thanks to its excellent equity analysis and formidable economic expertise. Chief Economist, Dr Holger Schmieding, was voted Europe’s top banking economist in the 2013 Thomson Reuters Extel Survey. In 2013, Germany’s oldest private bank significantly ramped up its activities in the area of investment strategy and is establishing a Chief Investment Office in Frankfurt to develop investment. Renowned investment expert Stefan Keitel was recruited for this role.
“Now that our business has become international, it’s very important that we are represented in the main financial hubs,” explains Hendrik Riehmer, one of the fully liable partners. As in previous years, the Bank therefore increased its presence considerably in the global financial centres. Berenberg now employs 179 people in London, 81 in Zurich, 54 in Frankfurt and 18 in New York and Boston. Overall, the number of employees went up by just under 3% in 2013 to 1,147 (previous year: 1,116).
Assets under management also performed very well, rising by 6.8% to EUR 30.1 billion (previous year: EUR 28.2 billion). Total assets, which are less significant for the business model, grew to EUR 4.5 billion (previous year: EUR 4.3 billion), while liable equity capital increased to EUR 223.4 million (previous year: EUR 220.9 million). “With a core capital ratio in the Berenberg Group of 15.3% (previous year: 14.4%), we continue to remain well above the levels required in the future,” says Peters.
“We have assumed a strong position in the business sectors that are important for us. We want to consolidate this further and are therefore investing in highly qualified staff and the expansion of our first-class infrastructure”, explains An-dreas Brodtmann, one of the fully liable partners. As a result, staff costs in-creased to EUR 149.0 million (previous year: EUR 140.0 million), while general administrative expenses (staff, IT, marketing, material costs) rose to EUR 235.1 million (previous year: EUR 214.9 million). Overall, the Bank ended the financial year with record earnings of EUR 66.1 million (previous year: EUR 60.2 million).
In recent years, Berenberg has been rewarded numerous times for its high quality with top positions in various rankings. Nevertheless, we have responded to changes in our operating environment and have actively launched change processes to ensure that we remain attractive as a strong and reliable partner.
“We are continuing to see a trend towards independent consulting and our aim is to extend our position as one of the leading providers in this market,” explains Dr Peters.
Areas such as private equity, real estate, forestry, farmland and art complete the range of services on offer. For example, the Berenberg Real Estate Office structured the first investment product in Germany under the new German Investment Code (KAGB) with a business and health centre at the University Medical Center Hamburg-Eppendorf as a so-called special AIF with approximately EUR 40 million. The fund was successfully placed by the Private Banking division. Berenberg is regarded as an all-round financial advisor for our private banking clients.
In 2013, Berenberg’s International Private Banking operations were brought under the same management, with the result that the activities of Berenberg Bank (Schweiz) AG, which has offices in Zurich and Geneva, and the London branch are now more closely interlinked. “This means that we are represented at the three most important locations for international private banking in Europe, and are in an excellent position to meet the needs of globally operating private clients,” explains Andreas Brodtmann.
Berenberg’s Investment Banking division focuses on services and client business in the area of equities and pensions, is involved in IPOs and capital increases, and advises on mergers and acquisitions.
According to Bloomberg, Berenberg was ranked second in Germany, Austria and Switzerland as a result of our involvement in 13 primary transactions (IPOs and capital increases). “That’s a major success for us!” says Hendrik Riehmer. “We increased our market position in Germany, Austria and Switzerland in 2013, and were involved in almost every IPO here, as well as in around 60% of capital increases and reinvestments in the German high-end SME segment (MDax, SDax). We also successfully tackled the international expansion of our business and carried out transactions for the first time in countries such as the UK, France and Sweden.” Berenberg is generating additional demand in capital market business by targeting other groups such as medium-sized institutional investors, family offices and wealthy private investors.
The Bank was once again able to increase the number of its ECM transactions year-on-year; up to a total of 23, from 18 the year before. Berenberg was in charge of IPOs at LEG Immobilien AG (EUR 1.2 billion), Deutsche Annington AG (EUR 578 million), Uniqa AG (EUR 758 million, Austria) and Riverstone Energy Ltd. (GBP 760 million, UK) as well as capital increases for Gildemeister (EUR 223 million), AT&S AG (EUR 101 million, Austria) and Surteco SE (EUR 80 million). Berenberg also played a key role in the spin-off of Osram AG from Siemens AG, and we carried out numerous share reinvestments – including for the Haniel family (Takkt AG shares, EUR 154 million) and the Vossloh family (Vossloh AG shares, EUR 202 million).
Providing comprehensive customer service is of particular importance. In 2013, the number of meetings with clients rose by 30% to 8,600, and the number of meetings with covered companies increased by 40% to 6,500.
Traditional equity brokerage for institutional clients was also very successful. While there was only slight growth in the market as a whole, Berenberg managed to increase its client commission by 50%, thereby expanding the market share considerably.
Berenberg’s involvement in bond issues increased further. After just 18 months, we successfully managed a number of transactions, including as joint bookrunner for the convertible bond at Kuka AG. We were once again co-lead manager for the Otto Group and were part of the syndicate for Strabag SE and Wienerberger AG. In total, the Bank was involved in 13 transactions. We also further enhanced out presence on the market in the area of M&A – in particular for complex company transactions.
The Asset Management division pursues an active and quantitative investment style. The range of products and services for institutional clients comprises a number of selected areas with particular expertise. These include optional mar-ket-neutral strategies to achieve additional returns, risk management strategies for currency positions, overlay management of share and interest rate risks as well as quantitative selection strategies for shares and bonds. The strategies are implemented in special mandates, pure overlay/portable alpha solutions and retail funds.
Today, Berenberg is not just one of Europe’s leading currency managers; its business is also becoming more international overall. For example, one third of the assets under management in this area now belong to clients outside Germa-ny. In order to further expand the market presence nationally and international-ly, Berenberg has increased the number of staff in both customer service and customer acquisition. This includes establishing the institutional business in Austria and a dedicated service for investment consultants, who play a big part in awarding contracts in Germany. Berenberg will also continue to drive the sale of Berenberg retail funds in order to provide sales partners and end clients with access to institutional investment strategies. While just a few years ago Berenberg Asset Management served the German-speaking world exclusively from our offices in Hamburg, the division is now also represented in the financial hubs of Frankfurt, London, Vienna, and soon New York.
This division is home to the traditional corporate client business, the industry mainstays of shipping and real estate financing, and the structured finance spe-cialists. Corporate banking has been able to acquire semi-institutional clients in addition to the traditional corporate and shipping clients. In partnership with the Bank’s other divisions, the transaction business has successfully evolved into the business with institutional investors and large, single family offices. In the area of shipping, Berenberg believes that the capital markets and financial investors (private equity) are becoming increasingly important. Thanks to its strong capital market business and its growing shipping business, which is free from own interests, Berenberg is in an excellent position to take advantage of this trend.
* provisional figures
Director Corporate CommunicationKarsten Wehmeier
Phone +49 40 350 60-481 email@example.com