LBBW: Operating Soundly, Making Big Moves and Breaking New Ground

Landesbank Baden-Württemberg (LBBW), a mid-sized universal bank, promises its customers – whether corporate, institutional, or retail, to be by their side wherever they go.

With deep roots in Baden-Württemberg, LBBW is also present at economic and financial hubs worldwide. The company places its expertise at customers’ disposal — and is just as involved and innovative as they are because LBBW thinks and acts like an entrepreneur.

As an institution under public law, LBBW is owned by the Federal State of Baden-Württemberg, the Savings Bank Association of Baden-Württemberg and the City of Stuttgart. With total assets of €238b, LBBW is ranked among the largest banks in Germany.

LBBW is also one of the leading Debt Capital Markets (DCM) houses in the country. Like no other bank over the past three years, it has further improved its market position and is consistently holding top positions in the league tables for euro-covered bonds (coming in at second place in 2018 and garnering first places in 2016 and 2017). LBBW is also a leading institution with respect to inaugural DCM transactions – and has been so over a significant period, with transactions from all major European jurisdictions and from Canada to Asia.

Also, LBBW has been one of the most frequent issuers in the respective market, with 12 benchmark trades in euros, dollars, and pounds sterling issued over the past three years. After having brought its first-ever senior unsecured green bond to the market in late 2017, LBBW also issued its first Pfandbrief under a green bond framework this past June. LBBW is one of the top partners for structuring and managing green bond issues in Germany.

The LBBW Group has over 10,000 employees working out of 160 locations throughout the country. Its head offices are in Stuttgart, Karlsruhe, Mannheim and Mainz. LBBW also looks after its customers at 17 locations worldwide, from New York to London and Singapore.

This bank can be depended on, in good times and bad. LBBW works conscientiously to establish trust — which is indispensable for a longstanding and successful partnership in banking. Many of the customer relationships that LBBW has cultivated have stood the test of time over generations. LBBW promises to provide appropriate financial backing to help meet the needs of business professionals and individual customers alike.

LBBW recognises that companies require capital and first-rate advice in their financing ventures. For the past 200 years, it has been in the company’s DNA to operate on a sound basis while, at the same time, making bold moves. Its mission statement, “Breaking new ground”, is valued by small, large and mid-sized companies; global corporations; and the many other customers that put their trust in LBBW. The company works hard to earn this trust and understands that it must do so each-and-every day.

Q&A Session with Patrick Seifert

Managing Director: Patrick Seifert

What excited you about the businesses you worked for during your earlier career and what excites you about the business you now lead?
Across the different roles I have been in charge of, there have been two recurring patterns: I guess I have always aimed for a tangible link between my job in finance and the real world. In helping clients achieve their corporate objectives with the help of financial services. In other words, putting finance to the service of the client. Pretty basic in that I remain convinced that finance needs to have a meaningful role in economy and society. An obvious example is the strong momentum of sustainable finance and the role green and social bonds increasingly play in the transition of the industrial economy. Which brings me to the second motivation in my career: Replicating successes and making quality advice available to a broader scale of clients. Understanding the essence of business there remains an important driver of growth without compromising on quality.

“I am eagerly waiting to see some normalisation on the interest rate front. The ECB has been supporting the market, and it has not been a surprise to my team and me that their implication will be much longer than initially expected.”

What is special about the management style at your organisation, the team you lead, and the workforce?
Management styles change over time and probably have to because the world changes as well. If there is the one driver keeping me motivated, it is the entrepreneurial freedom to develop my franchise. It was what made the difference between my successes and failures. This trust is something I try and delegate as much as possible in the hands of my guys. They are the ones operating close to the market, in need to take educated decisions. I want them to be strong and meaningful in front of their clients — I think we are talking about my management style having a lot in common with empowerment. At the same time, I like to get my hands dirty and remain actively engaged with clients. I’m always in close cooperation with my team and for the benefit of the client when we need to really drill deep and refine the best of ideas. In return, it helps me to remain client-centric when discussing strategic topics in the bank. Keeping the feedback loop short is what matters.

How would you characterise short to mid-term prospects for the industry in which you operate?
From a profitability point of view, recent years have not been great for European banks. More than ever, this suggests consolidation at the horizon. There surely have not been major exits lately and lots of players are still competing for too little of a market. But when compared to the major US banks for example, the fragmentation of European banking simply makes no sense. I, therefore, remain convinced that stronger institutions will take the upper hand. Cleaning their balance sheet, keeping strict risk management, improving on the capital side, and aligning their business model will be major homework to developing economies of scale. Potentially less accommodating markets could be accelerating the elimination process — after all, the market clean-up typically happens in the downturn. We at LBBW are committed to servicing our clients throughout market cycles and, therefore, look forward to upcoming opportunities. The consolidation will be driven by the client, making choices on how much focus and commitment his partner banks deliver going forward.

What are the personal and business strengths that qualify you as a corporate leader?
I am a professional with a generalist management education underpinning my broad work experience. In a world of specialists which the capital markets business often is, this gives me the chance to provide a different angle to colleagues and — more importantly — to clients. Alongside a probably more old-school and reliable approach, I enjoy maintaining long-standing cooperation with many clients. We build relationship that serve clients rather then having a transactional approach. Surely, the next trade matters in this competitive market, but in the end, it’s just another building block in a successful relationship with our clients.

What to your mind makes for good corporate leadership in your particular industry?
For all its sophistication, I observe that capital markets business is kind of slow to include the benefits of digitalisation. At best, this reflects the unique nature of services provided. Yet we probably all sense that there are also activities which could be made more economical for clients and banks likewise. This is obviously where the fragmentation of the European market does not help — a point addressed earlier on. Good corporate leadership, therefore, shows the ability to invest in the future needs of clients without losing focus on today’s needs of your clients. You might think this is a very general answer, but I firmly believe that the high level of uncertainty in business, the emergence of new technology, and pressure on profitability is making it very difficult to strike that fine balance.

What are your short-term hopes for the future of your business and the industry as a whole?
I am eagerly waiting to see some normalisation on the interest rate front. The ECB has been supporting the market, and it has not been a surprise to my team and me that their implication will be much longer than initially expected. A lot of these monetary actions were needed but the downside in my view means we need at least some normalisation now. More market dynamic, credit differentiation and real-money investors. Market swings. Opportunities. All reconciled through a market-clearing price, providing a strong incentive for market participants to constantly improve their business models for a successful future.