Helaba CEO Thomas Groß presented himself as both an advocate for European banking consolidation, and surprisingly open regarding the contentious issue of a European Deposit Insurance Scheme (Edis), during a recent discussion with Frankfurt journalists. However, he was more reserved when it came to consolidation within Germany’s regional banks. While the idea of creating a „super-Landesbank“ has been debated for years, there has been little tangible progress. Instead, regional banks prefer targeted collaborations in specific business areas, as Groß noted.

Helaba and LBBW, for instance, began cooperating on tasks in the savings bank segment back in 2021. Groß envisions an eventual market consolidation into two Landesbanks, but refrained from naming names.

However analysts say that it is likely that Helaba would at some point absorb a smaller institution. SaarLB, the smallest Landesbank, with a balance sheet total of just 19 billion euros, could be a candidate.

In the field of artificial intelligence (AI), Helaba has already identified 85 use cases, ranging from credit risk analysis to knowledge management. According to Groß, some areas could experience workforce reductions of over 50%, though he declined to provide further details. The bank has so far invested a low double-digit million euro amount in AI, with plans to allocate a similar amount over the next two to three years.

After years of cost-cutting and hiring freezes, Groß has shifted gears. In 2023, the bank hired around 200 new employees, a third of whom were under 30. For 2025, approximately 300 new hires are planned. Helaba is also making steady progress towards its mid-term goal of achieving a 1 billion euros pre-tax profit. Despite the challenging situation for many clients amid the ongoing recession in Germany, the bank remains solid in terms of risk. „The peak in risk provisions was in 2023,“ said Groß. „We are now seeing a significant slowdown in new non-performing loan cases.“ In the first half of 2024, the institution made bigger loan loss risk provisions than in the same period in 2023, at 173 million euros.

The corporate banking segment has been improving, after a first half of 2024 when the contribution to earnings of the Corporates & Markets segment fell from 183 million to 41 million euros.

The investment priorities of corporate clients are not in Germany but rather in Asia and North America, emphasised Groß. „And we are seeing an increase in working capital,“

The real estate area has continued to improve. Pre tax earnings in the Real Estate segment were 93 million euros in the first half of 2024, compared to a loss of 25 million euros in the first half of 2023, thanks to lower losses from loan provisions.

The bank has been proactively managing its real estate portfolio, with a gradual reduction since mid- 2023 to around 35 billion euros. But with the market still projected to recover only slowly during 2025, the portfolio might be scaled back further to around 30 billion euros.

Over the longer term, the segment volume is expected to stabilise between 30 billion and 35 billion euros. Groß currently notes particular caution in the office sector, and in US business. „The worst is behind us“, said the Helaba-CEO. And residential real estate financing has recently picked up again.