The way is cleared for the purchase of BHW-Holding AG. Deutsche Postbank AG will acquire the 74.6 percent stake in the Hameln-based company currently held by majority shareholders Beteiligungsgesellschaft der Gewerkschaften AG (BGAG) and Deutscher Beamtenwirtschaftsbund (BWB). The acquisition of private pensions and insurance specialist BHW will make Postbank Germany’s leading financial service provider for private customers.

Including the 9.2 percent stake acquired from ERGO Group in March 2005 and the 7.8 percent stake held by BHW itself, Postbank will control more than 90 percent of BHW shares.

The agreement is subject to the suspensive condition that BHW is released from all risks related to AHBR, in particular all guarantees BHW has granted for AHBR.

The Bonn-based bank expects the total purchase price for 100 percent of BHW shares to be a maximum of EUR 1.79 billion, thus below BHW’s current market value of more than EUR 2.6 billion. The transaction will be a pure cash transaction and no capital increase is planned.

Subject to antitrust and regulatory clearance, Postbank aims to complete the legal transfer of BHW on January 1, 2006.

front row, from left to right  Prof. Dr. Wulf von Schimmelmann, Dr. Wolfgang Klein
back row, from left to right  Dr. Helmut Balthasar, Kay Neumann; Peter Heesen, Gerd Eßer, Dr. Helmut Meier-Tanski, Hans-Richard Adenauer, Dr. Michael Spielberger, Loukas Rizos

 Creation of Germany’s largest financial services provider
Prof. Wulf von Schimmelmann, Chairman of the Management Board of Postbank, said: “BHW Group and Postbank is a perfect fit. This transaction will create Germany’s leading financial services provider.” The combined company will be market leader in terms of customer numbers and key products, von Schimmelmann added, citing the strategic benefits of the transaction. Together, the two companies will be the clear market leader in terms of new customer growth and cost efficiency for standard products by better exploiting the joint technical platform.

 

Henning R. Engmann, Chairman of the Management Board at BHW Holding AG, said: “We regard the transaction announced today as a major opportunity. The partnership with a company as successful as Postbank not only provides BHW with a sound base for the future, but also with outstanding opportunities to develop our specific strengths further.”

More than 14.5 million customers make the combined company Germany’s leading financial services provider. With 12.2 million customers, Postbank already has the largest customer base of any bank in Germany. Now, BHW’s three million customers will be added to that number.

The new entity will also hold the No. 1 position in the German market for several key products. With a volume of more than EUR 46 billion in home financing, the two companies remain unchallenged market leaders. They are also number one in savings and home-loan savings with a combined volume of EUR 59 billion and in demand deposits with a volume of more than EUR 16 billion.

“We all have reason to enter this new alliance with confidence. With its pronounced sales culture, BHW is bringing an additional quality to the Postbank Group, a quality that will open new opportunities,” BHW’s Engmann said.

 

 


Quantum leap in sales

 

“The decisive competitive advantage of the combined group will be the unparalleled network of distribution channels. Together with BHW, we will make a quantum leap in selling power. Our unique distribution interface leaves nothing to be desired – neither for our customers nor for us,” said Wulf von Schimmelmann.

In addition to the 850 retail outlets which Postbank plans to take over from its parent Deutsche Post AG, it also sells through another more than 8,000 Post branches. With BHW’s more than 800 service outlets, this will create the by far largest branch network in Germany.

At the heart of BHW’s sales force are the more than 4,200 independent consultants who have demonstrated strong performance in recent years. Postbank has some 400 financial consultants in its Vermögensberatung unit. With a total of 4,600 representatives Postbank and BHW together will have one of the largest mobile distribution arms of any German bank.

With its DSL Bank subsidary, Postbank also is strong in third-party home financing and consumer loans. It has access to a cooperation network of 5,500 partners. BHW supplements this with 1,000 partners in addition to 4,200 financial consultants.

Wulf von Schimmelmann: “BHW’s independent agents will allow us to exploit our customer potential more intensively; managing our multi-channel offering from one source. This ensures efficient coordination of and cooperation between all sales channels and allows us to address all customer segments in an optimal manner. In the medium term, this will help us to further improve our cross-selling rate and to sell more products per customer.

In the Transaction Banking division, the two companies supplement each other well. “With our large customer base and strong distribution, we can achieve an even better utilization of our back offices. We have the most efficient technical platform of any financial services provider and the transaction allows us to realize additional economies of scale,” said von Schimmelmann.

Postbank has become the No. 2 provider by in-sourcing payment transactions from third-party clients. Similarly, BHW is the No. 2 provider of credit processing through its so-called “Credit Competency Center.” More than 200,000 transactions are processed by BHW every year, with a total portfolio of 1.5 million contracts being administered.

The efficient financial services platform is fully scalable for further growth and represents the basis for maintaining cost leadership with standard products, von Schimmelmann said. “By integrating further third-party clients, we hope to generate additional revenues.” Von Schimmelmann is expecting significant synergy potentials resulting from the transaction.

Integration as success factor

The Chairman of the Management Board at Postbank regards the acquisition of BHW as a unique growth story. Similar corporate cultures will ensure a rapid and smooth integration, von Schimmelmann said. Both companies are modern and successful financial service providers and concentrate on volume business with retail customers in Germany. Von Schimmelmann said: “We have grown with our customers and reached stability in terms of growth, revenues and – not to be forgotten – employees. Closeness to the customer and a tight cost culture characterize our joint self-understanding.”

BHW Management Board Chairman Engmann highlighted the fact that “In all our activities, we are driven by four core ideas: customer satisfaction, sales orientation, product innovation and willingness to accept permanent change. We thus have a great affiliation to Postbank.“

Wulf von Schimmelmann emphasized the positive prospects for BHW Group employees: “We will keep the Hameln location and the BHW brand,” he said. He asked employees to be open for new tasks and challenges. “It’s very important for us to convince BHW’s independent financial consultants that they have excellent opportunities in the new company. For them, Postbank’s large customer base and the extended product range represent considerably improved sales potential.