ANNUAL REPORT 2006 - DG Hyp

PRICE DEVELOPMENT FOR RESIDENTIAL REAL ESTATE IN GERMANY (1995–2005)
110
106
102
98
94
90
86
82
78
1995 = 100
1995 1996 1997 1998 1999 2000
West Germany East Germany
The renaissance of German retail business –
home loan financing as the anchor product
Business with retail customers – which only a few years
ago was regarded as not sufficiently profitable by various
market players – has returned to the focus of all banking
groups. In the course of this development, the enormous
potential offered by the German retail market – which was
disregarded for quite some time – is once again being
recognised by banks competing for business. As one of the
largest economies worldwide, with top rankings in terms
of infrastructure and wealth, the requirements for financial
services in Germany are quite demanding. The crisis surrounding
inadequate social security systems (unemployment
insurance, health cover and retirement provisions)
will boost retail demand for products designed to secure
the standard of living for the long term. Against this background,
the retail business is currently experiencing an
extraordinary boom, indicated for instance by the fast
growth and fierce competition in the consumer credit busi-
6 Deutsche Genossenschafts-Hypothekenbank AG | Annual Report 2006
2001 2002 2003 2004 2005
ness. Similarly, very attractive deposit rates or free current
account offers were unheard of just a few years ago.
It is thus not surprising that new competitors are
challenging the market presence of established financial
services providers. Given Germany's economic power and
its central location in Europe, for international players there
is virtually no way around the German market. Accordingly,
competition in retail banking is increasingly being driven
by large international banks facing traditional providers
such as savings banks or cooperative banks.
Home loan financing has traditionally been an anchor
product in retail banking, as it offers the chance of tying in
a long-term business relationship with customers, with the
opportunity to cross-sell a diverse range of financial services.
Alongside other forms of private retirement provision,
real estate financing is a key anchor product for crossselling
and cultivating long-term relationships.