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Renaissance of a classic: European corporate banking

2012

Corporate business is back in focus as a part of strategic realignment by European banks. Lasting success requires precise risk management and a strong refinancing capability. And new relationship management that is efficient, transparent, and international.

When it comes to European banks' corporate business, you can't help thinking of the tale of the ugly duckling that promptly changed into a proud swan. In the heyday of investment banking before the financial market crisis, corporate business was at best of interest for filling various capital market vehicles with attractive loan assets.

Corporate banking today is the focal point in the realignment of many credit institutions. Corporate business is attractive because it earns above-average profits in times of economic upturn. For Germany, Roland Berger estimates that its earnings potential is growing considerably faster than the gross domestic product. That isn't to say that it has grown easier as a result – quite the opposite. In the course of economic recovery in many European countries, enterprises have acquired capital and liquidity cushions, thereby gradually reducing their dependence on banks.

At the same time, large firms especially have further professionalized their financial management, making use of alternative financing and comparing terms and conditions on an international scale. The requirements placed on banks with respect to loan facilities, stability, safety, or access to the capital market are correspondingly exacting.

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