Bancassurers are thriving again, but for how long?
In an era of negative rates, banks are more dependent than ever on their ownership of ancillary products to attach to low-margin mortgages.
It’s not meant to be like this. In the new digital world, banks are supposed to be financial supermarkets, developing internationally transportable distribution platforms with high-value third-party products. Even loans and deposits – certainly insurance and savings products – should be outsourced in this model.
Ten years ago, Allianz’s sale of Dresdner to Commerzbank, together with ING’s carve-out of NN – both triggered by the 2008 crisis – were supposed to have heralded the death of bancassurance. But that has not come to pass.
Today, as higher capital requirements and negative rates have become longer-term features of the financial landscape, ownership of in-house factories for insurance and asset management products is a rare saving grace for many continental European banks.
No wonder banks resist selling. ING was forced to exit NN as a requirement of its 2008 bailout. Yet for others, even capital shortages may not be enough to persuade them to follow suit, as some Spanish banks (notably Banco Sabadell) might demonstrate today.
It’s a similar story in all of the main continental European states. Banks that own insurers and asset managers with big domestic market shares are performing much better than many of their peers.