A wave of consolidation is reshaping the German regional banking landscape, pushing the total number of independent cooperative banks and savings banks below 1,000 for the first time in 2025. A recent study by consultancy firm Zeb, published in the Handelsblatt, reveals a decline of 34 institutions, leaving just 987 remaining. This trend, while seemingly relentless, masks a more nuanced reality of cautious mergers and underlying structural challenges.
While rescue operations have been implemented to stave off collapses, the pace of consolidation amongst cooperative banks has remained stubbornly moderate. Data indicates 23 mergers occurred up to November, including complex combinations of three and even four financial institutions – a testament to the difficulties inherent in integrating disparate systems and cultures. This represents a reduction of 27 institutes, building on a previous reduction of 25 in 2024 and following years marked by losses of 40 and 35 institutions respectively.
Savings banks have experienced a comparatively slower rate of attrition, with six mergers (including a three-way combination) leading to a decrease of seven institutions. This leaves a total of 342 independent savings banks nationwide, including the Berlin Sparkasse.
The ongoing consolidation serves as a stark indicator of the pressures facing smaller, regionally focused banks in Germany. Increased regulatory burdens, persistently low interest rates and the rise of digital banking alternatives are all contributing factors. While mergers are often touted as a solution to improve efficiency and strengthen resilience, critics argue that they can erode local decision-making and reduce access to banking services in smaller communities.
The Zeb study underscores a critical question: are these mergers genuinely fostering a stronger, more sustainable banking sector, or merely postponing an inevitable reckoning for institutions struggling to adapt to a rapidly evolving financial environment? The government and financial regulators face a delicate balancing act in supporting these vital regional players while ensuring the overall stability and competitiveness of Germany’s banking system. The future viability of these institutions will depend critically on their ability to innovate, embrace digitalization and maintain a vital connection with the communities they serve.