It was almost exactly six years ago that the then head of Commerzbank and the president of the German Savings Banks Association (DSGV) engaged in this public exchange. Martin Zielke said at an industry event in Frankfurt that he wanted to buy a savings bank in order to drive forward consolidation in the financial sector. He then added with a wink that Helmut Schleweis was probably not very enthusiastic about the idea. Schleweis replied dryly: „We won't agree on savings banks, but we can talk about Landesbanks.“

Commerzbank itself has now become the object of desire for Italy's Unicredit, and the former DSGV president's favourite project of forging a central savings bank institution, starting with the merger of Helaba and Deka, is off the table. However the discussion still flares up from time to time, for example in January, when Helaba CEO Thomas Groß stated that he expected the number of Landesbanks to be reduced to two. Currently, as in Schleweis's times, there are four large institutions – LBBW, BayernLB, Helaba, and a slimmed down Nord/LB. There is also SaarLB, whose total assets correspond to those of a larger savings bank. Landesbank Berlin now only operates under this name – but functions as a savings bank.

Contrary to Schleweis' scenario, a Landesbank is now taking a liking to a commercial bank. However, it is not Commerzbank that Helaba is warming to, but Aareal Bank – as has been rumoured for weeks. If this were to happen, it would further complicate any consolidation of the Landesbanks, but could improve Helaba's position in the rankings. In 2024, it was number three in terms of size and profit behind the southern German Landesbanks.

This is proof that bank consolidation in Germany can sometimes also be possible across different pillars. Mergers usually take place within the same banking family, namely among savings banks, cooperative banks, and commercial banks. A recent exception is the purchase of ABK Allgemeine Beamten Bank by Berliner Volksbank. The takeover of the small commercial bank was finalised in January.

Although consolidation of the Landesbank sector has not progressed on a large scale, some progress has been made in recent years. Since Berlin Hyp, formerly part of Landesbank Berlin Holding, was transferred to LBBW in 2022, work has been underway to dismantle the complicated holding structure. According to the DSGV, Landesbank Berlin Holding has now been „de-operationalised“ and only holds shares in Berliner Sparkasse. The holding company is expected to disappear within one to three years.

More significantly, the Landesbanks have shifted business segments among themselves in recent years, thereby promoting the division of labour within the financial group. For example, Helaba has taken over documentary foreign business, foreign payment transactions for savings banks, and foreign currency and precious metals business from LBBW. LBBW, in turn, has been assigned interest rate, currency, and commodity management for savings bank customers from Frankfurt.

According to Nikola Glusac, partner at the consulting firm Bain and head of the banking practice group in German-speaking countries, the question of whether there will be any movement on the Landesbank issue at some point depends on a number of factors. These include political will and the ability to provide clear added value for both customers and owners.

The ownership structures of the Landesbanks vary greatly. While the federal states hold the majority of shares in BayernLB (80%), Nord/LB (64%), LBBW (including the city of Stuttgart: 60%) and SaarLB (75%), the savings banks hold the majority in Helaba. Under pressure from regulators, Helaba and BayernLB have restructured their equity capital, which has had an impact on their ownership structure.

Because the European Banking Authority (EBA) objected to silent participations being treated as core capital, the state pumped a total of 1.5 billion euros into Helaba as a cash contribution in exchange for two of its development programmes, and acquired an AT1 bond worth 500 million euros from Helaba. In the process, the state quadrupled its stake in Helaba from 8.1% to 30.1%. The savings banks sold off a significant number of shares, but remain the largest owners with 66%, down from 88%.

The regulators also took issue with the structure of a silent participation by the state in BayernLB. In the end, a settlement was reached that increased the Free State's stake in BayernLB from 75% to around 80%.

At the end of 2024, the Bundesbank counted 1,368 banks, 35 fewer than in the previous year. This means that consolidation in the German banking sector has continued „at a slower pace,“ as there were 55 fewer institutions in 2023. Jens Oesterle, Associate Partner at Bain, interprets the slower pace as meaning „that many of the obvious, organisationally uncomplicated mergers have now been completed.“ The remaining, larger, and more strategically significant mergers require more time and involve greater coordination and planning.

In addition, he believes that a changed understanding of consolidation is emerging: „It is no longer seen exclusively as a response to cost pressures or regulatory requirements, but is increasingly being used as a strategic tool – for example, to further develop existing business models or pursue entirely new approaches.“

The banking expert believes that the consolidation trend will continue in the coming years, especially since Germany has the most fragmented banking market in Europe. The ten largest banks account for around 60% of the sector's total assets, whereas in other countries the concentration is much higher: 99% in the Netherlands and around 80% in Italy and France.

According to the latest Bain banking study, the cooperative sector in particular still has potential for mergers. The average total assets there amount to 1.7 billion euros, compared with 4.4 billion euros for savings banks.

There were 22 mergers of credit cooperatives in 2024 – significantly fewer than in 2023, when there were 39 mergers. However, this does not change the general trend. Every year, two or three dozen Volksbanks and Raiffeisenbanks disappear. According to the Bundesbank, the number of credit cooperatives has halved to 661 within 20 years. The total number of banks in Germany has shrunk by 43% over this period. Five savings banks disappeared last year as a result of mergers, leaving 342 currently in existence. In the first half of 2025 alone, there were five mergers, including a merger of three banks.

The fact that there is also lively merger activity in the public sector is also evident in the case of the state building societies, whose number has fallen from eight to five since 2023. LBS West and LBS Nord merged to form LBS Nordwest, LBS Ost and LBS Schleswig-Holstein-Hamburg merged to form LBS Nordost, and LBS Bayern and LBS Südwest merged to form LBS Süd. The latter is directly supervised by the ECB due to its total assets of 38 billion euros.

The DSGV expects the „moderate merger trend“ of recent years to continue. It has identified „excessive regulatory requirements“ as the main driver, as bureaucratic burdens place a heavy strain on smaller institutions in particular. The National Association of German Cooperative Banks (BVR) cites the shortage of skilled workers as another reason, which makes it difficult for institutions outside the major cities in particular to find staff.