Commerzbank wants to export German business model

Germany's second-biggest lender Commerzbank is planning a push into corporate banking in Switzerland to fill what board member Markus Beumer said was a gap in services for medium-sized companies. "Switzerland has big banks. But they do about everything except corporate banking," Beumer, who heads Commerzbank's corporate banking unit Mittelstandsbank, told Reuters.
"We want to export our German business model to countries with a similar corporate structure such as Switzerland and the Czech Republic," he said in a Reuters interview.
These countries, like Germany, have a swathe of medium-sized companies, called Mittelstand in Germany, which are considered the backbone of the economy.
Switzerland has about 300 banks, and financial services account for about 15 percent of the country's gross domestic product (GDP). By comparison, Germany has 2,000 banks and its financial services sector makes up 4 percent of GDP.
The Mittelstandsbank unit is the cash cow of Commerzbank, and in the first nine months of 2012 posted a pre-tax profit of 1.27 billion euros ($1.63 billion) - more than all its other profitable units put together. The figure compares to a group result of 1.12 billion.
Aside from winning more small corporates as customers and selling more products to existing ones, Beumer sees "disproportionately high" foreign expansion as a main growth driver for his business.
Commerzbank aims to grow twice as fast abroad as in Germany by 2016, but at the same time its approach has become more focused than in the past.
"Our aim is to support the overseas expansion of our German customers and the expansion of foreign corporates in Germany," Beumer said, adding the bank would do no more business with companies when there is no direct German interest.
"We are constantly looking for new foreign markets that are being tapped by our customers: from Delhi and Bangkok to Kuala Lumpur," Beumer said.
Separately, Commerzbank aims to strengthen its foothold in trade financing, where it already has a European market share of 10 percent, he said.
Beumer added that the unit's profitability target of a return on equity of more than 20 percent by 2016 was by no means an understatement, despite Mittelstandsbank reaching 29 percent in the first nine months of 2012.