Frankfurt am Main, 16 May 2013
- Result from ordinary activities: EUR 2.18 million; net retained profits: EUR 0.4 million.
- Investment and future programme to secure growth potential through 2017.
- Extraordinary expense in double-digit millions already absorbed in 2012.
- Number of accounts and transaction volume reflect long-term structural change.
- Cooperation with KAS BANK ushers in European expansion.
Against the backdrop of structural change in the securities market, Deutsche WertpapierService Bank AG (dwpbank) laid key operational groundwork in financial year 2012, thus reinforcing its future viability. Despite incurring extraordinary expenses in the double-digit millions of euros in that connection, it generated a result from ordinary activities of EUR 2.2 million (2011: EUR 24.3 million). Net retained profits amounted to EUR 0.4 million (2011: EUR 16.2 million).
The profound upheaval in the securities market is reflected in a decline in transaction volume and in the number of securities accounts, both in Germany and internationally. The World Federation of Exchanges reported a 22% decline in global order book volume in 2012. Trading volume on the most important German stock exchanges fell by a similar order of magnitude. At dwpbank, the number of transactions settled fell from 25.4 million in the previous year to 19.4 million in 2012. The number of securities accounts at German banks subject to reporting requirements reached a new low at 24.8 million in 2012. The number of accounts has fallen by around 5 million since 2007 alone – banks and investment companies are equally affected. The number of securities accounts technically managed by dwpbank declined from 5.87 million in 2011 to 5.49 million in 2012.
“The securities market has been affected by a structural trend for years now. We believe that this trend will continue. The reasons for this include an increase in regulation and a fundamentally negative attitude on the part of private investors towards investing in equities in the wake of the financial and euro crisis. We are responding to this trend with efficiency enhancements and a growth strategy which covers the retail and the wholesale business”, said Dr Markus Walch, Chairman of the Board of Management at dwpbank.
At the end of 2012, the bank began the process of bundling expertise at individual locations. As part of that process, the bank initiated the relocation of activities in Hanover to other offices. This alone resulted in EUR 10.7 million in extraordinary expenses which weighed down earnings during the reporting year. In addition to systematic staff and non-labour cost management, the bank adopted an investment and future programme during the past year which is designed to enhance efficiency while realising growth potential. Specifically, the transaction bank will make a significant investment in the double-digit million euros in growth areas by 2017. This investment will focus on the further development of the wholesale service offering, as well as on banks’ corporate client transactions and proprietary transactions. In addition, the bank will continue to develop its service range in the retail online sector and push forward with its international expansion. The cooperation with KAS BANK serves as a key driving force behind dwpbank’s European expansion. The Dutch bank is both dwpbank’s first foreign client and its partner in a joint venture which aims at promoting shared sales activities for a pan-European securities settlement platform. In 2012 alone, more than EUR 6 million was invested in projects undertaken with KAS BANK, in wholesale activities and in OTC trading.
Furthermore, under its investment and future programme, dwpbank is increasing process efficiency through greater standardisation and the reduction of redundancies. The planned measures are expected to result in approximately EUR 30 million in savings by 2017.
“dwpbank’s business model will remain robust even in a market environment that will remain difficult over the long term. Though the situation in the securities business is not easy for any bank, it does offer dwpbank opportunities. The outsourcing of non-competitive processes, such as securities settlement, will become even more attractive for banks since doing so will enable them to significantly reduce costs. Our comprehensive future and investment programme is our answer to the fundamental structural change in the securities business. It will enable us to live up to our position as a central infrastructure provider for Germany’s financial markets going forward”, said Dr Walch.
Deutsche WertpapierService Bank AG (dwpbank) is the market leader for securities settlement in Germany. It is owned by banks belonging to the German Cooperative Financial Services Network (Genossenschaftliche FinanzGruppe) and the German Savings Banks Finance Group (Sparkassen-Finanzgruppe), which are equal partners. Represented by more than 370 direct clients and nearly 1,500 member banks in total, nearly 75% of all German banks make use of dwpbank’s securities settlement processes and systems. The transaction bank manages approximately 5.5 million securities accounts across various sectors. It bundles the securities business of the two cooperative central banks of the German Cooperative Financial Services Network, provides more than 80% of the securities services used today by savings banks and state banks (Landesbanken) and is a securities settlement partner for over 30 private and commercial banking institutions. With approximately 250,000 managed users – investment advisors and bank employees – dwpbank’s central securities settlement platform WP2 is one of the most significant IT applications in the German banking sector.
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