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Berlin Scares Off Banks Targeting the Rich as Fintechs Boom

'Poor But Sexy' Berlin Scares Off Bankers Targeting the Rich

(Bloomberg) -- Berlin’s “poor but sexy” appeal has helped to turn the city into a fintech hub with Goldman Sachs Group Inc. investing there and local startup bank N26 being valued at $2.7 billion. For some of Germany’s biggest private banks, however, the city’s demographics are a reason to stay away.

The heads of Frankfurter Bankgesellschaft and 345-year-old Bankhaus Metzler declared Berlin unfit to house private banking locations in recent weeks, blaming the lack of lucrative clients. Some competitors like Fosun International Ltd.’s Hauck & Aufhaeuser are also missing in the city, while Berenberg is only maintaining a satellite office with two people.

“You can find just a few small and medium-sized companies in Berlin”, said Metzler partner Emmerich Mueller on the sidelines of his firm’s annual press conference, adding that entrepreneurs are key clients in private banking. That makes it difficult to work profitably there, he said.

Berlin is the German state with the second highest unemployment rate and lags behind many other parts of the country in terms of average income. At the same time, accompanying low cost of living -- even though rising as of late -- has attracted both, young entrepreneurs and talented graduates, triggering a fintech boom. Banking platform provider Elinvar, co-founded by former employees of Deutsche Bank AG, won Goldman Sachs as an investor in May. Earlier in the year, N26 received $300 million from several backers.

The gradual rise of the fintech sector could help to put Berlin on the map for some private banks, at least in the long run.

“The startup scene as well as the increasing number of technology and real estate companies have laid the ground work for potential private banking clients, which we are keeping an eye on”, said Holger Sepp, board member of Hauck & Aufhaeuser.

Original Story:
’Armes, aber sexy’ Berlin lässt einige große Privatbanken kalt

Reporter on the original story: Stephan Kahl in Frankfurt at skahl@bloomberg.net

Editor responsible for the original story: Erhard Krasny at ekrasny@bloomberg.net

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