April 21, 2015 / 1:32 PM / 2 years ago

German banks need tighter cost management: Bundesbank

2 Min Read

Andreas Dombret, member of the board of the Deutsche Bundesbank speaks during a news conference at the Deutsche Bundesbank's Regional Office in Hesse in Frankfurt October 26, 2014.Ralph Orlowski

FRANKFURT (Reuters) - Germany's banks ought to focus on improving cost management as they revise their branch networks to catch up with the profitability enjoyed by international rivals, Bundesbank board member Andreas Dombret told a German magazine.

"Many banks appear to be rethinking the size of their branch networks in light of digitalization and demographic changes," Dombret told Euro magazine in an interview released ahead of publication on Wednesday. "There must be no taboos," he added.

"We look bad in terms of profitability in an international comparison," Dombret said.

Profitability at German retail banks as measured by their pre-tax profit margin is the lowest in major European markets at 22 percent, according to a study by Citibank.

Germany's largest lender, Deutsche Bank (DBKGn.DE), is considering spinning off a chunk of its retail operations, particularly its Postbank DPBGn.DE network, in a decision that expected in the coming days, sources familiar with Deutsche Bank's internal discussions told Reuters.

Other German banks are also looking at cost cuts to boost efficiency in their retail operations.

"Here, German banks could do more," Dombret said.

Reporting by Jonathan Gould; editing by Thomas Atkins and Louise Heavens

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