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Rampl: "We're going through all
our
businesses and asking 'do they make
money, do they fit our future, or
not?"
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"I wish my last year had been in better times,"
sighs Albrecht Schmidt, soon-to-be ex-CEO of HypoVereinsbank,
over lunch in a London restaurant. "There's still so much to
do." Officially Schmidt is still CEO until January - the
changeover was bought forward from May to pacify investors -
but when Euromoney meets him in mid-November, he's already
handed over day-to-day responsibility to the new CEO Dieter
Rampl. Schmidt now spends his time shuttling between Munich,
Brussels and London in his job as an ambassador for the
Munich Finanzplatz.
He's right that HVB still has a huge amount to
achieve before investors take it seriously again. But at
least there are analysts and bankers who still believe the
bank has a fighting chance of survival. "HVB will eventually
be the number one German bank," says one analyst. That's
partly by default - Deutsche Bank is no longer truly German,
Dresdner is part of an insurer and Commerzbank has become a
perennial takeover target. But besides this, says the
analyst: "HVB has vision and a good core business,
particularly in Bavaria where it has a 15% to 20% share of
the retail market."
That hardly compensates for the fact that the bank's tier I
ratio is dangerously low but, if it came to the crunch, bankers
feel that it is more likely to be able to squeeze money out of the
equity markets than its erstwhile competitor. "I can't even imagine
going to my equity commitments committee with a proposal to
underwrite an issue for Commerzbank," says one financial
institutions banker.
HVB could take the line adopted by Zurich Financial Services for
its £1.6 billion ($2.5 billion) rights issue last year. ZFS
persuaded investors to subscribe, even though it was in bad shape
because of over-aggressive expansion and declining stock markets,
on the grounds that the equity injection would enable it to pull
itself out of the hole. "Zurich told shareholders that this deal
was going to put it back on track," says a banker involved. "If it
hadn't happened then the investment case would have been much
weaker."
Also in HVB's favour, should it have to raise capital, is the
fact that Rampl has few illusions about the size of the task facing
him. "We are going through all our businesses and asking 'do they
make money, do they fit into our philosophy, are they our core
competencies for the future or not?'" he says.
He's already decided that HVB's real-estate operations, once
seen as a key part of the bank's identity, should be separated from
the rest of the bank. "We have to concentrate on our core
competencies and I see from the reaction of the press and analysts
that hiving off the mortgage bank was considered the right thing,"
he says.
Time to get out of Germany
Might an even more drastic cut be next on his list? Insiders at
the bank suggest that, like Deutsche, HVB is beginning to see
clearly the attractions of doing more business outside its home
market. Its retail operations in Austria and central and eastern
Europe are doing well, at least when compared with the German
retail division, and now represent 34% of the bank's revenues.
Ironically, HVB's best chance of becoming the number one German
bank may lie in it grooming its domestic operations for sale,
waiting for the markets to pick up and then pulling out of Germany
altogether: as long as it can find a buyer willing to risk the
consequences of the next dip.
That's a deal that Schmidt would no doubt have been keen to do
himself. Instead he must content himself with the chairman's seat
at HVB and his role at the Munich Finanzplatz promoting the merits
of Bavaria to the international business community. Maybe it's best
if he doesn't mention the banks.