Sounding Off with Martin Fritz: Fürst Fugger Privatbank Stays Independent in German Banking Scene
Interview by Stefan Kroneck, Munich
Bank maintains separate branches, foregoing merger plans.
The über-exclusive Fürst Fugger Privatbank (FFP) isn't chasing the acquisition spree sweeping through the German private banking sector. Instead, the Augsburg-based, high-end wealth manager is swimming in profits, vowing to grow at a faster rate than the market, and staying far from the consolidation fray.
"I haven't seen any German private bank that syncs with our vibe," Martin Fritz, FFP's CEO, candidly admits to the Börsen-Zeitung. The 64-year-old banking bigwig contends that the German private banking scene is a mismatched medley of institutions, making a merger a challenging task.
Banking deals are a dime a dozen these days. Last year, the Bethmann Bank, controlled by the Dutch ABN Amro, munched on the private bank Hauck Aufhäuser Lampe for €672 million. BNP Paribas from France gobbled up HSBC Germany's private banking arm. Even the merger talks between Munich's Merkur Bank and Hamburg's Schroderbank went down in flames.
FFP's history stretches back to 1998, when it became part of the Nuremberg insurance group. Only 1% of the company remains in family hands.
Sweet Returns
FFP is thriving, baby! "Our goal is to zoom past the market in terms of assets under management by 2025," Fritz asserts. The average yearly growth rate hovers between 4 and 6%. FFP clocked a 10% surge last year, pushing its assets under management beyond €7 billion. About half of this sum lands in the private banking segment, with the other half generated through financial intermediaries partnered with the bank. Half of FFP's growth originates from new business, while the other half stems from market expansion. FFP also reaps benefits from soaring stock prices.
Employing a sterling crew of 162, FFP plants its flag in six branches across Mannheim, Munich, Cologne, Nuremberg, and Stuttgart. In 2023, the bank tallied a pre-tax return on equity of 35.5%, and a post-tax return of 20%. Fritz sets sights on pre-tax returns of 38 to 40% for 2024 – mouthwatering figures for the banking sector.
Troubles at the Parent Company
"We're currently the Nuremberg insurance group's most profitable investment," Fritz concludes. The outlandish success of FFP lies in its single-minded focus on business strategy. FFP's revenues surge faster than its administrative expenses – a small silver lining for the traditional Franconian insurer. Sadly, the parent firm is in rough waters.
On account of the property and casualty insurance division's massive burdens, the company anticipates a 2024 loss. Swelling costs for motor insurance spares parts have crunched the Nuremberg group, putting the entire insurance industry in a bind. "FFP is neither a gold mine nor a strategic pillar for the parent company," Fritz candidly admits.
From a Struggling Bank to Mega-Profit Maker
FFP has been in the hands of the Nuremberg Group for a quarter-century now. Back then, the bank was struggling. The financial institution underwent a brutal transformation, exorcising its branch business and jettisoning its corporate client business to Deutsche Bank. With a leaner structure in place, FFP operates thriftier than ever.
Growing Cash Dividends
The Nuremberg Group benefits from swelling cash dividends from FFP. For 2024, the bank aims to shell out €9 million, representing 80 to 90% of its surplus – a €1.3 million ascent from 2023.
Yet, the initial vision of achieving synergies within a bancassurance model through FFP's acquisition has crumbled like a soap bubble.
- Despite the consolidation trend in the German private banking sector, Fürst Fugger Privatbank (FFP) remains independent, focusing on growing at a faster rate than the market.
- FFP, whose history can be traced back to 1998, is predominantly owned by the Nuremberg insurance group, with only 1% still in family hands.
- The bank, which operates with a leaner structure, clocked a 10% surge in assets under management last year, pushing them beyond €7 billion.
- FFP, headquartered in Augsburg, aims to increase its pre-tax returns from 35.5% in 2023 to between 38 and 40% in 2024, generating mouthwatering figures for the banking sector.
