Consolidation in retail banking is progressing: 30 to 40 mergers take place every year among credit cooperatives alone. The recently announced merger of BBBank and PSD Bank Berlin-Brandenburg stands out in particular. This is because their head offices are 520 kilometres apart. With a cumulative balance sheet total of 21 billion euros, the result would be the second biggest out of around 700 co-operative financial institutions.

CEO Oliver Lüsch explains why the Karlsruhe-based bank wants to join forces with the distant Berliners by citing the attractiveness of the metropolitan region as a business location and fintech stronghold. Although BBBank is focussed on organic growth, it is also constantly on the lookout for good opportunities, he says in an interview with Börsen-Zeitung.

Historically, BBBank, which operates nationwide, has a stronger presence in the south and west than in the north and east. PSD Bank Berlin-Brandenburg is therefore a good regional addition. In addition, with regard to the people involved, the bank fits in with BBBank not only in terms of business management, but also on a personal level, explains the CEO.

BBBank has been present in Berlin since 1993 anyway, since the capital city has a particularly large public sector. The nationwide cooperative retail bank has a total of over 70 locations, including branches in all German state capitals.

The bank wants to attract customers from other camps to the financial group – namely those that other Volksbanken and Raiffeisenbanken are unable to win over. „We are focussing on the high-end retail customer business,“ Lüsch explains. BBBank is happy to take on direct banks and online brokers as competitors. „We are like a decathlete,“ he says.

Civil servants and other presumably high-earning employees in Berlin's public sector are already being targeted by the top dog in the cooperative sector, Berliner Volksbank, which in February announced the acquisition of ABK Allgemeine Beamten Bank.

In line with the general trend among cooperative banks, the number of members at BBBank is declining. Between 2020 and 2023, the number shrank by almost 20,000 to just under 460,000. However, 60% of the Karlsruhe-based bank's new customers are under 39 years old, according to Lüsch.

BBBank's orientation is not entirely new, as it already opened up to all private investors in the 1960s in addition to its original clientele of civil servants. The bank has maintained a high credit rating in its loan book of 9.3 billion euros ever since – as Lüsch explains, it has hardly any defaults. In 2023 net profit rose to 16.2 million euros, from 13.2 million the previous year.

PSD Bank Berlin-Brandenburg also points to the Karlsruhe-based bank's decades-long presence in the German capital. In times of mobile working, the physical distance is also less important. Above all, however, the two institutions fit together personally and strategically: „Like us, BBBank was founded by postal workers,“ explains a spokesperson when asked.

In 1921, postal workers and other civil servants founded Badische Beamtenbank, the predecessor institution of BBBank, which has gone under its current name since 1999. The Berlin institution, on the other hand, has its roots in the „Post-Spar und Vorschußverein“, a self-help organisation for postal workers and their families founded in 1872.

Both are united by common values, a digital business model, and a high proportion of customers from the public sector, the spokesperson continued. „As PSD Bank Berlin-Brandenburg, we benefit from the size as well as the scaling and marketing opportunities of a strong partner with a nationwide branch network.“

At the same time, the merger will enable BBBank to better tap into the growth potential of the metropolitan region. As far as the merger is concerned, PSD Bank Berlin-Brandenburg is „in close consultation“ with the PSD Association, according to the bank. They do not wish to comment further on the ongoing process at this time.

The withdrawal of another PSD Bank raises questions about the continued existence of the PSD Bank Association. But the association is relaxed, stating that they accept the Berliners' strategy. „We assume that the bank's committees have intensively considered all facets of their decision,“ said a spokesperson. The remaining PSD banks have a combined balance sheet total of almost 25 billion euros and are therefore still larger than the two merger partners.

Following the exit of the Berlin-based banks, the Bonn-based association headed by Dieter Jurgeit will still have eleven members. Their number has been shrinking for years, whether through withdrawals or mergers. For example, PSD Bank Westfalen-Lippe left in 2023, PSD Bank Niederbayern-Oberpfalz left in 2015 and last year PSD

However, the spokesperson does not recognise any danger to the continued existence of the association, saying that "as long as the consulting and auditing association produces added value for its member banks, there will be no discussions about a possible dissolution.“ As the independence of the auditing association is guaranteed, the association can also exercise its auditing rights without restriction with a reduced number of member institutions.

He does not see any shrinking trend. On the contrary, in times of increasing regulatory requirements, it is evident that the services of the association are increasingly needed and in demand. The Executive Board initiated an ongoing optimisation process years ago. For example, AI applications will soon be used in consulting and auditing. „The auditing association has positioned itself for the future,“ said the spokesperson.