German technology conglomerate Siemens hopes to be granted a banking license so it can expand its portfolio of financial services and exercise greater control over its multi-billion euro investments.
German electrical engineering giant Siemens said Monday it was confident the Federal Financial Supervisory Authority (BaFin) would approve its application for a license to conduct banking business.
The application was prompted in part by the global crisis in the banking sector and in part by a need for greater flexibility in providing financial services to big customers, according to Siemens chief financial officer Joe Kaeser.
"In the current situation, with a legislative environment that is not totally transparent, we can be affected if banks have problems," Kaeser said in an interview with the German newspaper Sueddeutsche Zeitung.
"Our liquidity now amounts to about 9 billion euros, which means we really need to be able to make safe investments. We can do this ourselves."
Siemens has no plans to complete with retail banks like Commerzbank
Siemens also wants to beef up its financial services. But unlike some other industrial companies, it has no plans to expand into the retail banking business, Kaeser said.
General Electric (GE), for instance, has been operating a retail banking arm and providing financial services to businesses for more than 50 years. German carmakers BMW, Daimler and Volkswagen are other examples of manufacturers offering banking services, such as loans and debit cards.
Siemens sees several advantages in having its own banking license, according to company spokesman Georg Haux. Among them: the ability to place deposits directly with the German central bank and save on transaction fees levied by banks.
Managing a mountain of money
"For years, Siemens has been offering financial services to companies managing big engineering projects, such as wind parks," Haux told Deutsche Welle. "With a license, it will now be easier to provide financial services to these groups and others."
Although Siemens' core competency is in engineering and not finance, the company has successfully managed a mountain of money for decades, according to Thomas Vybierck, an analyst with NordLB.
Siemens has liquid assets worth some 9 billion euros
"Siemens has deep financial know-how and many very good people in this area; I'm not at all surprised by the move," Vybierck said. "In fact, there is a saying here that 'Siemens is a bank with an electronics business.'"
The analyst expects Siemens will also use its license to put competitive pressure on its "house banks" to attain better conditions.
Author: John Blau
Editor: Sam Edmonds