Mergers of cooperative banks

The trend towards consolidation continues

In recent years, the number of cooperative banks has fallen to just under 700 due to mergers. This trend is continuing, albeit at a slightly slower pace.

The current mergers are mainly driven by regulatory challenges as well as HR bottlenecks in the filling of key functions. In addition to size of operations, the shortage of skilled workers will become a major reason for regional banks to merge in the coming years.

Uncertain market environment

Geopolitical tensions are exerting pressure on the overall economy, high inflation rates have changed the interest rate landscape, which in turn has an impact on cooperative banks’ profit margins, while digital ecosystems and platforms are dynamically changing customer behavior.

Shortage of skilled workers

The shortage of skilled workers is being accelerated by demographic trends and is turning into a “war for talent”. In addition, the profession of banker has become less attractive. This shortage of adequate staff is limiting potential growth.

Sustainability

Environmental protection is strongly gaining in importance due to climate change. Accordingly, the green transformation of the economy and society is triggering a massive need for investment. A lack of size or skills entails the risk of not participating in the transformation.

Regulators

Regulatory requirements have increased significantly in recent years – and there is still no end in sight. Additional capital requirements are enforced through Basel IV and the regulations applicable since 2023. As a result, almost all cooperative banks are defining additional capital buffers that exceed the requirements.

Benefits that mergers can produce for cooperative banks

By extending in size and pooling their resources, cooperative banks can make a significant contribution to strengthening their resilience against external market influences they cannot control.

Moreover, the resulting availability at various locations makes them more attractive as an employer, which in turn facilitates the filling of key positions. On top of that, the increase in size can help them meet the considerable need for investment associated with the green transformation.

At the same time, cooperative banks can build expertise to handle the continuously increasing regulatory requirements.

That’s why all strategic options, including possible mergers, should be carefully considered on a regular basis.

How zeb can support your merger

Merger processes are demanding and require quick, but at the same time informed decision-making. As a leading expert in mergers of cooperative banks, zeb has extensive experience with mergers of all sizes and in all phases. In the last few years, zeb has supported more than 50 mergers of cooperative banks.
This extensive merger experience allows us and our experts to offer our clients professional support throughout the entire merger process. We guarantee tailored end-to-end support.

Sounding: creating transparency and developing solutions for strategic cornerstones together
Initiation: developing strategy and management concepts
Day-1 readiness: ensuring compliance with regulatory requirements
Integration: implementing organizational and cultural aspects of the merger and leveraging synergy effects

With our in-house developed integrated strategy and culture process, we actively address the issue of cultural integration, which is a key challenge in mergers. Our approach combines technical topics with cultural/integrative components, while various participation formats encourage dialog and the collaborative further development of the merged company.