“Volume in international corporates business continuously increased”
Jens Thiele
Global Head Project Finance & Corporates and General Representative
"In the Project Finance segment, we concluded around €700 million in new business. We are very satisfied with this and are building on it in 2023."
Last year, the bank set itself the goal of diversifying its corporate business and closing more deals abroad. Did it succeed? JT Yes, we succeeded in both areas. Our goal was to close €1 billion in new international business in 2022, and we achieved €1.2 billion. That is a strong result. We have continuously increased the volume of our international corporates business in recent years. In 2020, it was €600 million, then €900 million in 2021, and now it’s €1.2 billion. At the same time – and this is important – we have not increased the average ticket size. In this way, we reinforce the high granularity in our portfolio and thus spread the risks effectively. Overall, in our Corporates & Project Finance business area, we concluded gross new business of €2.4 billion, and profits after tax were €67 million – an excellent basis on which we will now build. Which countries are particularly important for the bank in its international business? JT In our international business, we focus mainly on Western and Northern Europe as well as the US. These are markets in which we see good risk-return ratios and an acceptable legal environment. In doing business there, we aim to have a broadly diversified portfolio. Among other things, we completed a first transaction in France in 2022 and in eight other countries. What kind of deals do you focus on in Corporates International? JT The focus is on credit products like working capital lines and term loans, but it also includes bonds and factoring. Overall, it’s a mix of primary transactions and of participations in deals, usually about half-half, although in 2022 it was slightly more participations. In addition, we have succeeded in increasing cross-selling with our customers. This applies to payment transactions, deposits and hedging products – and strengthens our customer relationships. In 2022, the bank became more active in London again. What role does that location play? JT London is important for us. It’s where many companies, banks and consulting firms are based, so London continues to be a very significant financial center. Having a presence there is important both for acquiring transactions and for monitoring them. In Germany, corporate banking has recently been characterized by very high competition among banks. How important is German corporate banking for the bank at present? JT The market is indeed still not easy, because many are trying to become more profitable via larger volumes – in vain. We have a different approach: For us, the focus is on profitability since we are convinced that business has to be profitable for everyone involved.
Jens Thiele (left), Jan-Frederick Meyer and Linda Müller
What does that mean in numbers? JT In Corporates Germany, we signed new business of €400 million in 2022. After a phase of consolidation in which we were not so active, we grew again in 2022. In the process, we managed to substantially increase our profitability in our core segment. It’s been a great success for all our colleagues, who have done a super job. In addition, cross-selling is responsible for over 40 percent of earnings. What is the bank’s core segment? JT It’s comprised of companies mainly from the north with a sales volume of between €100 million and €750 million. We have long-standing relationships with many of them. Some of the companies are active in leasing and factoring, which at the moment is particularly attractive to us. Ultimately, however, we also go beyond the parameters I’ve described, both in terms of size and regions.
Jan-Frederick Meyer, key account manager Corporates Germany, about Mein Auto Group AG
The deal: €50 million in working capital for the leasing company Mobility Concept GmbH.
The story behind it: Jan-Frederick Meyer: ”In recent years, digital car sales in Germany have changed considerably and become more professional. Vehicle sales via the online platform Mobility Concept GmbH are growing significantly and offer companies and private individuals a simple and fast way to lease or purchase a vehicle at attractive conditions – often including insurance and service packages. The leasing company Mobility Concept GmbH specializes in fleet solutions in the B2B sector and continues to rapidly expand its B2C business via Meinauto.de. We are supporting the company in this endeavor with an operating credit line of €50 million. The company is part of MeinAuto Group AG, one of the leading online platforms for selling new cars digitally in Germany. It is exciting for us at the bank to assist a company in a rapidly expanding market sector and support its further growth. In this case, there is also the fact that we have considerable expertise in financing leasing companies and enjoy being active in this area. So it’s a good fit.”
thanks to a credit line of
the leasing company Mobility Concepts GmbH can further expand its business operations.
The bank changed its payment transaction provider last year. Are the resulting advances in technology helping in the customer business? JT We invested in Payments because we want to be successful there. Last year, despite the technically challenging switch to a new provider, we managed to completely achieve the goals we had set ourselves. We now want to move onto a growth path, and we have added staff to achieve this. To what extent did the changed environment caused by Russia’s invasion of Ukraine, including high inflation and increased interest rates, influence the course of business in 2022 in the Corporates & Project Finance area? JT First of all, the invasion was a big shock. In purely economic terms, the rise in interest rates has made refinancing much more expensive for companies. That puts pressure on companies’ available cash flow, which automatically has an impact on risks. We are keeping a very close eye on that. At the same time, companies have had and continue to have a need for new financing. I am pleased that we have been able to assist many customers here. Overall, we have not seen any significant negative impact in our portfolio or in new business, but we must continue to be very vigilant. The bank is active in financing infrastructure projects. How did Project Finance 2022 go? JT In the entire Project Finance segment, we concluded around €700 million in new business, all of it profitable. We are very satisfied with this and are building on it in 2023. The demand for renewable energy is increasing. The bank has many years of experience in this area. Is that paying off? JT While the expansion of renewable energy in Germany is more urgent than ever, it stalled badly in 2022. There are several reasons for this: One is the approval procedures for new plants. The other is supply bottlenecks for components, especially from Asia. The energy transition is necessary and we are available to support it with financing. But it is not enough to focus on solar and wind in the energy sector. Other segments are also important, for example waste-to-energy plants and district heating networks, and we are active in both areas. What are the expectations for 2023? JT For us, the aim is to grow in a risk-conscious manner in each of our segments – Corporates Germany, Corporates International, Project Finance, and Payments & Trade. This applies both to new business and to sustainable earnings.
Linda Müller, key account manager Project Finance, about the financing of fiberglass networks in Germany for Primevest CP.
The deal: HCOB is providing more than €120 million for various projects carried out by Primevest Capital Partners (Primevest CP). These funds will be used to finance the rollout of the fiber-optic network in suburban and rural areas in Germany.
The story behind it: Linda Müller: ”We have been in contact with Primevest Capital Partners since 2020. The solid business relationship that has developed since then enabled us to implement a large number of projects together in 2022. Primevest is now one of our core clients in the project finance sector. HCOB structured the financing bilaterally, thereby leveraging the deal team’s industry expertise. The bilateral investment loans are funded under the German government’s KfW Digital Infrastructure Program, which was launched to support the construction and expansion of the fiber-optic network in Germany. This shows the strategic importance that the network’s expansion has for Germany; it is essential for the country’s digitalization. Overall, we still have a lot to do in Germany when it comes to increasing the availability of fiber-optic networks. Less than one-third of households have access to the technology, and all households are supposed to have it by 2030. Primevest CP’s networks mainly serve suburban and rural areas and are leased to Internet providers. More than 100,000 private households can be supplied with fiberoptic connections made possible by these projects. This is another step on the way to nationwide coverage based on this technology”
the bank is providing Primevest Capital Partners more than
to expand fiber-optic networks in Germany
Michael Rothehüser, Head of Corporates Germany
At home in Hamburg - deals with a regional reference
“We have a long-standing business relationship with BDV Behrens, including a deep mutual understanding of our business models. BDV Behrens supplies its international customers – many of whom are based in Africa or South America – with a range of products, including chemicals, fertilizers, pharmaceutical goods and paper. With payments taking as long as 180 or 270 days in South America, it needs an adequate and reliable supply of working capital financing. HCOB supports BDV Behrens through a factoring program. In concrete terms, this means that we buy credit-insured receivables that the company has acquired from its customers. BDV Behrens immediately receives the equivalent value of these receivables less agreed costs. Factoring is a flexible addition to the classic working capital line, for example for balance sheet planning, and is thus a sensible component in a company’s financing mix. In total, we provide BDV Behrens with $20 million in factoring financing. The company can generate liquidity from receivables up to this amount. We have been offering factoring to our customers for many years and want to further expand the field in our German corporate customer business.”