DZ Bank merges financing divisions DG Hyp and WL Bank

The Frankfurt-headquartered DZ Bank, the central institution for Germany's local co-operative banks Volksbanken and Raiffeisenbanken, is merging its two real estate financing subsidiaries DG Hyp and WL Bank. Following organic growth and historic mergers and acquisitions, the bank now had an unwieldy structure with three divisions financing commercial real estate, now to be streamlined.

DZ Bank's CEO Wolfgang Kirsch said in a recent statement about the bank's reorganisation that, "DZ BANK Group has four companies with a strong position in the real estate business – DG HYP, WL BANK, Bausparkasse Schwäbisch Hall, and DZ BANK AG – all of which have developed successfully in their own right. Following the merger (of DZ BANK and Düsseldorf's WGZ BANK in 2016), we are faced with overlaps which we need to address through a realignment of our real estate financing business."

Concretely, he added that WGZ Bank's real estate business would be transferred to DG Hyp, after which DG Hyp and WL Bank would be merged. The move anticipates savings of the "low to middle double digit millions of euros". The Bausparkasse Schwäbisch Hall, a consumer building society, will remain a separate entity servicing the retail market.

The new merged bank will initially be jointly headed by DG Hyp and WL Bank's CEOs Georg Reutter and Frank Mühlbauer, respectively.

DG Hyp increased its new business in commercial real estate financing from €5.7bn to €7.4bn in 2016. WL Bank issued real estate loans for around €4.2bn during each of the past two years (of which €3.5bn were for residential property in 2016).