Munich Financial. Market Figures. Banks

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1 Munich Financial Market Figures Banks Total number of banks Located in Munich foreign banks Branch offices of domestic banks Representative offices of foreign banks Employed persons 33,414 33,276 32,818 Percentage of the total number of persons employed in Munich Business activity Business volume in billion EURO foreign banks Interbank loans due at call Number of financial services institutions INSURANCE COMPANIES Total number of insurance companies Employed persons 29,185 29,309 29,271 Percentage of the total number of persons employed in Munich Gross contributions in billion EURO Assets under management in billion EURO STOCK EXCHANGE Trading volume in billion EURO Stocks and options

2 Business activity Business volume in billion EURO 516.6 575.9 613.2 683.0 752.2 foreign banks 3.4 4.2 4.5 5.4 5.0 Interbank loans 121.5 137.9 141.0 159.3 162.7 due at call 10.6 16.0 13.0 12.3 14.

2 Innovation The Munich venture capital market The venture capital market is particularly suitable for young companies to raise capital before going public. Domestic as well as international venture capital firms consider Munich as an attractive location. At the end of 1999, the direct investment volume amounted to approximately 1.4 billion EURO this is 20% of the total volume held by the members of the German Venture Capital Association. The reasons for the attractive Munich venture capital market are: a huge number of young, innovative companies and investors, highly qualified resources of human capital ; and, last but not least, the cultural attractions of the city itself with its picturesque countryside. The Munich Financial Center Initiative The Munich Financial Center Initiative, created under the overall charge of the Bavarian Ministry of Economics, aims at strengthening the financial center: A network is created in order to intensify the communication between the financial market players and academic institutions and to create a platform for further developments. State of Bavaria Contact Address Phone Fax Internet Bavarian Ministry for Economic Affairs, Transport and Technology Mr. Bertram M. Brossardt Prinzregentenstrasse 28 D Munich (+49 89) (+49 89) info@invest-in-bavaria.de Source: Land Central Bank in the Free State of Bavaria Invest in Bavaria a joint project between the Bavarian Ministry for Economic Affairs, Transport and Technology and Bayern International Publisher: Bayern International GmbH, Print: Mediengruppe Universal, München

4 billion EURO this is 20% of the total volume held by the members of the German Venture Capital Association.

3 Financial market Invest in Bavaria Facts Invest Financial Center in Bavaria Munich Bavarian Ministry for Economic Affairs, Transport and Technology

4 Munich a competitive financ Munich is on the way to becoming the leading financial center in Germany. For years now, the Bavarian capital has taken the no. 1 position in the field of insurance, no. 2 in banking, and no. 3 in stock exchange. New developments have also advanced the Isar metropolis to a top position in the areas of asset management and venture capital. And in order to further strengthen the accompanying agglomerate effects arising from the presence of human and financial capital in the city, the "Munich Finance Center Initiative" has been recently established. Development Bavaria is an especially dynamic economic region in Germany and Europe: Since the early 1990s, Bavaria has gained an economic growth of 8 percentage points over the remaining states of former West Germany. The financial industry played a decisive role in this context. Real gross value added of the Bavarian banking and insurance industry increased by 59 % (federal 46%) this is considerably more than the overall Bavarian economy could record (21%). The importance of Munich as a financial center reaches far beyond Bavarian borders. This is already reflected in the employment figures: In 2000, Munich banks and insurance companies employed more than 68,000 persons; one out of three of the persons employed in the Bavarian financial industry works in Munich. Munich an important banking center in Germany In Germany, the Munich banking center ranks second after Frankfurt. Considering the total business volume of the German banking industry (in 2000: 7,925 billion EURO), one out of ten EURO can be assigned to Munich banks. A total of 169 banks are located in Munich, or have a branch or representative office there. If we only take the domestic banks into account regardless of foreign banks and their representative offices Munich, domiciling 153 credit institutions, even outdoes Frankfurt (138). The number of persons employed in the Munich banking industry is correspondingly high (about 33,000). In its function as the Bank of banks, the Land Central Bank plays an important role in refinancing and payment transactions, in banking supervision and in communicating monetary policy, as the contact for banking, business and the Bavarian government. Munich s banking community is considerably diversified. Credit cooperatives and savings banks offer a wide range of financial services. The superregionals Bayerische Hypo- und Vereinsbank AG and Bayerische Landesbank no. 2 and 6, respectively, of the German banking industry in terms of assets offer the whole range of products of internationally working banks. Moreover, private banks tailor individual solutions to satisfy customers needs beyond mainstream banking. The Bavarian mortgage banks, managing more than one-third of mortgage bonds in circulation in Germany, are particularly important for this market.

And in order to further strengthen the accompanying agglomerate effects arising from the presence of human and financial capital in the city, the "Munich Finance Center Initiative" has been recently

5 ial market Safety No. 1 Insurance Center The insurance companies domiciled in Munich are of prime importance. The Bavarian capital ranks first in Germany both with regard to the total number of persons employed in the insurance industry and to the total amount of contribution receipts (followed by Hamburg and Cologne). Internationally seen, Munich even outdoes New York and London in terms of the premiums income. Among the almost 90 insurance companies located in Munich are the biggest of this branch, such as the world s biggest reinsurance company, the biggest underwriter worldwide and the biggest legal protection insurer in Europe. Moreover, the biggest public insurer group as well as the second largest German health insurer are located in Munich. The share in the overall German contribution receipts can be seen as a proof of Munich s rank as an insurance center: 42.1 billion EURO - or more than 25% of the contribution receipts - was made by Munich insurers in More than 29,000 persons nearly 12% of the persons employed in the German insurance industry earn their living from Munich insurance companies. A major asset management center The Munich financial center has been given a new impetus by the development of asset management. The big local insurer groups have developed asset management as an independent branch of their business and have established institutions for this purpose. In 2000, the assets managed by the subsidiaries of corporate groups totalled about 856 billion EURO. Asset management for own and thirdparty account has always been performed by the major banks and several bank-owned or independent investment companies. A parallel can be drawn between Munich and Frankfurt on the one hand, and New York and Boston on the other: One financial center focuses on securities trading, the other one on asset management.

and Cologne). Internationally seen, Munich even outdoes New York and London in terms of the premiums income.

6 The Bavarian Stock Exchange With a total of 170 billion EURO in 2000, the Bavarian Stock Exchange ranked third in Germany after Frankfurt and Stuttgart. Regarding the bond market, Munich even ranked second, since 79.8 billion EURO of the total turnover was made in bond trading. In view of the dominant role of the Munich-based mortgage banks, it becomes evident that the Stock Exchange feels particularly committed to fostering the mortgage bond market. Due to its range of services, the Bavarian Stock Exchange is particularly attractive for private investors and small and medium-sized companies. In a quality and service offensive, it applies new criteria to stock trading in terms of price and swiftness. Apart from the PricePlus Guarantee that guarantees the best price following the prices of the most liquid market on the international scene, the TOP US 130 project ensures that prices of US-securities are also strictly in line with the corresponding US-prices. In addition to this, the new limit control system SkontriX, introduced exclusively on the Bavarian Stock Exchange, ensures a swift and optimal execution of orders. Considering going public, the Bavarian Stock Exchange is divided into three quality segments: Prädikatsmarkt, Prädikatsmarkt Select and TOP Quality Market. Competence Whereas the Prädikatsmarkt is suitable for going public of young, innovative companies, the Prädikatsmarkt Select paves the way from the over-the-counter market to the orderly market; the TOP Quality Market, however, is tailored to the needs of top small and medium-sized familyowned businesses. As for all products, competition is the driving force for stock exchange services in order to improve services and to ensure fair prices to the advantage of both those who provide and those who require capital. The advantage of having more than only one stock exchange in Germany became evident by several initiatives taken by the regional stock exchanges that applied new criteria to stock trading. Creativity, flexibility and credibility are the preconditions for a regional stock exchange like Munich to maintain its position in a highly competitive market and not to surrender to a monopolistic stock exchange in Germany or Europe.

In view of the dominant role of the Munich-based mortgage banks, it becomes evident that the Stock Exchange feels particularly committed to fostering the mortgage bond market.

Real Estate Clients. For more information on HSH Nordbank Hypo s business, please refer to pages 58 and 59.

Real Estate Clients. For more information on HSH Nordbank Hypo s business, please refer to pages 58 and 59. 31 Real Estate Clients HSH Nordbank is one of the most sought-after providers of finance on the German real estate market. Backed by our extensive specialist skills in financial services for all aspects