Munich Financial Center: Top in Finance!

Munich Financial Center: Top in Finance!

Contents Editorial: Munich Financial Center Champion of the Bavarian Economy 3 4 6 8 10 12 15 16 17 18 20 22 25 26 27 Editorial The Financial Center at a Glance History of the Financial Center Insurance Banking Asset Management Stock Exchange Private Equity and Venture Capital Leasing and Factoring Institutions Research and Education Location Expatriates / Human Resources Members of the Initiative / Contact List of Illustrations Bavaria s economic and innovative power and top-level research are recognized around the world. The fact that Bavaria is also Top in Finance is, regrettably, not as widely known. That is unfortunate. Bavaria is now one of the most important financial centers in Europe because of the high quality and wide range of companies that it offers in the areas of asset management, banking, insurance, leasing, equity funds and venture capital. Munich is the No. 1 insurance center in Germany, the No. 2 banking center, the No. 1 asset management center and the top private equity, venture capital and leasing center in Germany, and it also has an important stock exchange. Because of ever fiercer competition, it is important for Bavaria to continue to consolidate its position as a top international financial center. That is the reason why the Bavarian ministry of economic affairs initiated the Munich Financial Center Initiative, in which prominent representatives from financial services, insurance companies, venture capital and leasing companies, the Bayerische Börse AG, chambers of commerce, trade associations and the field of science are taking part. In addition, we have gathered expertise from all of the major players in the financial services sector as part of the cluster initiative of the Bavarian government. The goal is to get the Bavarian financial services sector to work more closely with science. In this brochure, you will find out more about one of the most important financial centers in Europe, its businesses, institutions and special environment. Erwin Huber Bavarian Minister of Economics, Infrastructure, Commerce and Technology

The Financial Center at a Glance: Top in Finance! Bavaria and the Munich metropolitan area in particular rank among Europe s leading financial centers. This holds true for all branches of finance for the traditional banking and insurance sectors, as well as asset management activities, venture capital solutions, and leasing and factoring trades. In addition, the Munich financial center is extremely well positioned in this industry, with offerings that are both broad-based and at the cutting-edge. This is demonstrated by the fact that many prominent businesses in the financial sector have their head offices in Munich and Bavaria. Among the most widely known are the Allianz and Munich Re insurance groups, the Nuremberg insurance groups, HUK- Coburg, HypoVereinsbank and BayernLB. They all represent an economic sector that is one of the leading drivers of growth in Bavaria and will actively represent the Munich Financial Center Initiative abroad. For that purpose, major companies, organizations and institutions have joined together to promote the importance of the financial center and draw attention to its views and recommendations. Insurance: A global leader Banking: One of the most important banking centers Asset Management: A leader in Europe Stock Exchange: One of Europe s most innovative stock exchanges Venture Capital / Private Equity: No. 1 in Germany Leasing: The leading leasing center in Germany 4 5

History: Dynamic for Hundreds of Years Munich has had an exceptionally successful history as a financial center. Throughout its history and up to the present it has been characterized by dynamism, know-how and entrepreneurial boldness. Milestones 1486 The Fugger Brothers trading house in Augsburg was designated for the first time as a bank. It developed into today s private bank, Fürst Fugger. 1774 Founding of Fürstlich Castell schen Bank, Credit-Casse, in Castell. 1821 The first Bavarian savings bank was opened in Nuremberg. 1830 Opening of the Munich stock exchange. 1835 Founding of Bayerischen Hypotheken- und Wechsel-Bank AG (Hypo-Bank). 1864 Hypo-Bank introduces mortgage bonds. 1869 Founding of Bayerische Vereinsbank AG. 1880 Founding of Munich Re. 1889 Carl v. Thieme and Wilhelm v. Finck, the co-founders of Munich Re, found Allianz Versicherungs-AG. 1911 Founding of Bayerische Rückversicherung AG. 1916 Hypo-Bank is now the largest mortgage bank in Germany. 1924 Swiss Re acquires Bayerische Rückversicherung AG (since 2001 Swiss Re Germany AG). 1941 D.A.S. moves its headquarters from Berlin to Munich. 1949 Relocation of Allianz Versicherungs-AG s head office from Berlin to Munich. 1949 Founding of first German mutual fund, ADIG-Investment. 1958 Hypo-Bank and Bayerische Vereinsbank found Internationale Immobilien-Institut GmbH (iii-investments). It is the first investment company for open real estate funds in Germany. 1971 Nürnberger Versicherungsgruppe introduces variable life insurance and helps it become popular throughout Germany. 1975 Noris Verbraucherbank, Nuremberg, is the first German financial institution to introduce customer self-service. 1994 ADIG opens the first German money market fund. 1994 Hypo-Bank founds Direktanlage-Bank, the first German discount broker. 1997 Munich Re combines a major portion of its direct insurance activities under the umbrella of ERGO Versicherungsgruppe AG. 1998 Merger of Hypo-Bank and Bayerische Vereinsbank into Bayerische Hypo- and Vereinsbank AG (HVB), thus creating Germany s second largest bank. 2000 Indexchange AG is the first company to issue exchange-traded funds (ETFs) in Germany on the DAX and on the Dow Jones Index. 2001 Allianz acquires Dresdner Bank. 2001 Founding of the Financial Center Munich Initiative. 2005 The HVB merges with the Italian UniCredit to form the fifth largest European bank. 6 7

The Munich and Bavarian Insurance Center in Figures* Munich Employees: 29,000 Insurance companies domiciled in Munich (and region): 80 Bavaria Employees: 65,000 Insurance companies domiciled in Bavaria: 110 The Largest Insurers at a Glance* Allianz Employees worldwide: 162,000 Turnover 2004: 96.9 bn. euros Münchener Rück Employees worldwide: 41,000 Gross premiums: 38.1 bn. euros D.A.S. Employees worldwide: 3,600 Premium incomes: 1.16 bn. euros Insurance: A Global Leader Munich is one of the leading insurance centers worldwide. About 80 insurance companies have their headquarters in the Bavarian state capital and its surrounding towns among them one of the most important direct insurers worldwide, the Allianz Group; the world s largest re-insurance company, Munich Re; Europe s leading legal expenses insurer, D.A.S.; Germany s most important insurance group under public law, Versicherungskammer Bayern (Bavarian Insurance Chamber); as well as the largest group of professional pension plans in Germany, Bayerische Versorgungskammer (Bavarian Pension Chamber). In addition to the insurance groups domiciled in Munich, numerous other foreign and domestic insurers maintain principal offices in the metropolis on the Isar, among them Swiss Re, one of the world s leading reinsurers. The insurance industry employs around 29,000 people in Munich alone, more than in any other German city. Across Bavaria, about 65,000 people work for insurance companies. Of that number, more than 12,000 work in the two additional major Bavarian insurance locations Nuremberg and Coburg. Along with HUK- Coburg, one of the most important German automotive insurers, and the Nürnberger Versicherungsgruppe among other things, in second place among occupational disability insurers additional leading German insurance companies are domiciled in these cities. Nürnberger Versicherungsgruppe Employees worldwide: 37,000 Premium incomes: 2.9 bn. euros HUK-Coburg Employees worldwide: 8,700 Premium incomes: 4.2 bn. euros *rounded data from 2004 8 9

Banking: A Leader in the Sector The Bavarian Banking Center at a Glance* Bavaria plays a central role in German banking. Overall, the banks domiciled here have lent funds totaling about 730 billion euros to business and consumers. That s more than 15 percent of the total lending volume of German banks. Munich banks alone represent one-tenth of the entire business volume of the German credit services industry. That makes the Bavarian state capital the second most important banking center in the Federal Republic. Overall, about 50 banks are headquartered here including two of Germany s largest banks, Bayerische Hypo- und Vereinsbank AG (HVB), which in 2005 merged with the Italian UniCredit to form the first truly European bank, and Bayerische Landesbank. In fact, about 160 banks, including numerous foreign banks, are present in Munich. This underscores the international significance of the financial center. Bavaria itself is the home market for around 530 banks, including more than 80 savings banks and just under 370 cooperative banks. This means well over 20 percent of all German banks are based in Bavaria substantially more banks than in any other federal state, and even more than in the banking country, Switzerland. The banks employ approximately 126,000 people. Traditionally, Bavarian banks play a major role in the mortgage business. For example, Munich banks issued around one-third of all mortgage bonds floated in Germany. Number of financial institutions: 530 private banks: 80 savings banks: 80 credit unions: 370 Employees: 126.000 private banks: 32,000 saving banks: 58,000 credit unions: 36,000 Total assets: 984 bn. euros Total loan volume: 730 bn. euros * rounded data from 2004 10 11

Munich s Innovations in Asset Management Asset Management: Value and Innovations First German investment company First German investment fund First mutual fund in Germany First German money market fund First exchange traded funds on the DAX Pioneer in total return bond funds In 1949, ADIG launched the first German fund company ever in the Bavarian state capital. Today, asset management companies held by Munich companies manage about 1,500 billion euros, one of the highest values worldwide. Among other factors, the high level is attributable to the innovative skills of Bavarian asset management companies. They have been successful in rapidly recognizing and creating trends, and in developing new products as needed that set the standards. Accordingly, the first open real estate fund and the first money market funds, for example, originated in Munich. And more recently, Munich companies helped exchange traded funds and total return bond funds break through in Germany. In addition, the industry is very actively pushing the introduction of REITs (Real Estate Investment Trusts). The high quality of the assets managers working in the Munich financial center is shown, among other things, in the fact that many of the funds managed by Bavarian companies distinguish themselves in the pertinent performance ratings. As a result, they are trusted by private and institutional investors from unrelated sectors and even finance companies. The financial center also has major importance for closed funds some of Germany s largest initiators of this industry are at home here. 12 13

Stock Exchange: Success with Innovations The Munich Stock Exchange provides an ideal combination of the traditional and the modern. Germany s third-largest exchange, founded as early as 1830, has developed into one of Europe s most innovative securities trading centers. Among other things, this is evident in the new SME segment, M:access, as well as Max-One, the trading system developed by the Munich Stock Exchange and introduced in 2003. This system guarantees the exchange will transact an order immediately and completely at the best price - and thus considers the needs of private investors in particular in a unique manner. This service is one of the reasons why the Munich Stock Exchange has recently been able to significantly expand its market share. Listed on the Munich Stock Exchange are a total of 2,700 German securities and government bonds, as well as 3,600 international securities from more than 60 countries. The advantages of Max-One are particularly evident when dealing with international securities. Also in this respect, the Munich Stock Exchange offers its clients a uniquely high-quality performance. Munich and its environs are also the headquarters of several securities trading firms, among them Baader Wertpapierhandelsbank and MWB Wertpapierhandelshaus. These are among the leading securities trading banks in the Federal Republic and are some of the institutions that guarantee the advantages of Max-One. Munich Stock Exchange in Figures* Number of tradable securities: 4,300 number of domestic securities: 700 number of foreign securities from more than 60 countries: 3,600 Number of tradable government bonds: 2,000 Total revenue in 2005 in bn. euros: 15.4 securities: 3.7 bonds: 11.7 * rounded data from 2005 15

Leasing and Factoring: The Market Leader The Munich metropolitan area is Germany s leading region for leasing. Of the approximately 430 major leasing companies in Germany with equity capital of at least 250,000 euros, just under 120 are located in and around Munich, and 48 of those are headquartered here. The three most important of them alone Kommanditgesellschaft Allgemeine Leasing (KGAL), LHI Leasing and Hannover Leasing together administer a total investment volume of approximately 66 billion euros. In addition, they are among the top German issuers of closed funds and are consequently based in the most important market for these financial products in Germany. Private Equity and Venture Capital: The Most Popular Venture Capital Center The Munich metropolitan area is also among the leading factoring locations in Germany. Two reasons for this are Eurofactor AG, the market leader for import factoring in Germany, and Siemens Financial Services, the fastest growing German factoring supplier overall in 2004. Bavaria is the most important German federal state for the venture capital and private equity industry. Around 50 VC and private equity companies have their headquarters in Munich. Furthermore, many other German and international companies in this sector have major offices in the Bavarian capital city. The very high number of venture capital companies is primarily attributable to the fact that they find an ideal environment in Munich and Bavaria. After all, Bavaria is one of the most important regions in the world in the fields of IT, medicine and biotechnology, and has an especially strong service sector at its disposal. That is why venture capital and private equity companies in Bavaria particularly have so many investment opportunities in industries that traditionally attract a lot venture capital and private equity money. In 2004, the risk capital issuers placed about 760 million euros in Bavaria. That is the highest annual amount they have ever invested in a single German federal state. 16 17

Institutions: Support for the Economy Bavaria has developed from an agricultural state to a high-tech and service provider location in just a few decades, thanks to the strong performance and innovativeness of the companies located here. Essential support came from the Bavarian state government and local authorities, as well as regional and local institutions, trade associations and chambers of commerce. in Bavaria. The same holds true for the banking associations, trade associations and chambers of commerce, for example the Chambers of Commerce and Industry (IHK), and local chambers of crafts. They provide streamlined help to investors and local companies and thereby strengthen the financial center as well. The Bavarian state government created reliable and business-friendly conditions and thereby laid the essential political foundation so Bavaria could develop into one of the premier business locations in Europe. Similarly, public institutions like the economic and employment departments of the cities and communities as well as Invest in Bavaria, the settlement and location marketing initiative of the Bavarian ministry of economic affairs, essentially contribute to the fact that a particularly business- and innovation-friendly climate can prevail 18

Overview the Business and Finance Departments in Bavaria Coburg Hof Aschaffenburg Würzburg Bamberg Bayreuth Weiden Nuremberg Research and Education: The Knowledge Cluster Ansbach Bavaria ranks among the most important educational and research locations in the world: with about 50 public and private universities, colleges and art schools. Approximately 250,000 students are registered at them, and around 41,000 of those have chosen economic studies. with the headquarters of the Max Planck Society and the Fraunhofer Society, two of the most famous research organizations in Germany. The Max-Planck Society operates 12 research institutes in Bavaria, the Fraunhofer Society runs eight. and with many other research facilities, including, for example, the Ifo Institute for Economic Research. The Bavarian government actively promotes closer cooperation between science and the economy. This enables it to link theory and practice, and ensures intensive collaboration among Bavarian universities, especially among their business and finance departments. Included in these cluster policies are the further development of educational opportunities and the optimization of research and academic education, for example through the earliest possible exploration of trend-setting topics, as well as through greater incentives for product innovation and internationalization. All of this serves to further strengthen the international competitive position of the financial center. Regensburg Eichstätt Deggendorf Ingolstadt Passau Landshut Freising Neu-Ulm Augsburg Erding Munich Neubiberg Rosenheim Kempten 20 21

Bavaria s Economy in Figures* Location: A Leader in the Heart of Europe Munich and Bavaria have one thing in particular in common: They surpass by many That also puts them in the forefront when are each home to 15 large corporations. market indicators and studies other German cities and states. the economic importance of compared to other cities, and emphasizes Bavaria. Economic growth: +1.6% GDP (real): 403.7 bn. euros GDP per resident: 32,408 euros GDP per gainfully employed person: 63,512 euros Exports: 126.5 bn. euros Export growth: 7.2% Total gainfully employed persons: 6.4 mio. Employed social insurance contributors: 4.3 mio. Percentage of self-employed persons: 11.9% ** * data for 2005 City ranking: Munich has the strongest economy of all large German cities. Outlook for Growth and Prosperity: Munich is the German city with the best prospects for growth and affluence. Market Capitalization: Measured by market capitalization, Munich is the most important city for stock exchanges in Germany. Nowhere else has as many Blue Chip, as well as mid- and small-cap, companies as here. ** data for 2004 Employment: The number of employees covered by social insurance in Bavaria has increased by almost a quarter in the last 30 years almost four times as much as the west German average. Patents Registrations: Bavarian companies and researchers apply annually for more than a quarter of all German patents a very high number in comparison with other German states. Top Companies: Approximately 90 of the 1,000 largest German companies have their headquarters in Munich. In this area, Munich is ahead of every other German city by a large margin. Augsburg and Nuremberg 22 23

Expatriates: Quality attracts Quality Welcome to Bavaria For top executives, leading companies are the preferred addresses. It s more fun, after all, to work for the best of the best such as the top-notch companies, as well as the research and educational organizations, in Bavaria. In Munich alone, seven of the 30 DAX companies have their headquarters. They all rank among the global market leaders in their industries. In no other German city are workers as highly qualified as in Munich. Many high potentials, especially those from abroad, come to work in Bavaria because the entire environment is attractive in Munich, its surrounding areas and in all of Bavaria. Munich is a prospering world-class city, liberal but very safe, with Bavarian flair and unique recreational offerings. Unsurprisingly, Munich has one of the highest quality of life indexes of all large world-class cities. According to a study conducted by Mercer Human Resource Consulting, the Bavarian capital ranked fifth among the 53 metropolitan areas studied. Nuremberg came in 22nd also in the top half three positions ahead of San Francisco, the top US city. Bavaria s appeal is particularly evident in the population trends: Every year, around 85,000 people move to Munich alone. Many of the newcomers come from other countries. You will probably find it very easy to meet people from your own country in Munich, because about 300,000 people close to 25 percent of the inhabitants of the city come from other countries. Bavaria also has a very extensive cultural life, which adds immeasurably to the overall quality of life. This includes theaters and movies as well as author readings and other cultural activities, including English-language events. America House Munich is the center for English-language cultural events. In addition, Bavaria boasts a varied landscape, historical sites, and a rich array of sporting and recreational possibilities. The Alps, which are ideal for summer and winter sports, are practically at your doorstep. 25

Contact List of Illustrations Financial Center Munich Initiative c/o Munich Stock Exchange Lenbachplatz 2a 80333 Munich Germany E-Mail: kontakt@fpmi.de www.fpmi.de Members (as of January 2006) Allianz AG www.allianz.com Baader Wertpapierhandelsbank AG www.baaderbank.de Bavarian Bankers Association www.bayerischer-bankenverband.de Bavarian Chambers of Commerce and Industry (BIHK) www.muenchen.ihk.de Bavarian State Ministry of Economic Affairs, Infrastructure, Transport and Technology www.stmwivt.bayern.de Bayerische Hypo- und Vereinsbank AG www.hvb.de BayernLB www.bayernlb.de City of Munich www.muenchen.de/arbeitundwirtschaft Deutsche Bundesbank Regional Office Munich www.bundesbank.de Genossenschaftsverband Bayern e. V. www.gv-bayern.de Handwerkskammer für München und Oberbayern www.hwk-muenchen.de HUK-COBURG insurance group www.huk.de ibi research www.ibi.de 26 Ifo Institute for Economic Research at the University of Munich www.ifo.de Institut für Kapitalmarktforschung und Finanzierung www.kmf.bwl.uni-muenchen.de KG Allgemeine Leasing GmbH & Co www.kgal-gruppe.de Lehrstuhl für Mathematische Statistik der TU München www-m4.ma.tum.de LfA Förderbank Bayern www.lfa.de Münchener Hypothekenbank www.muenchener-hypothekenbank.de Munich Re Group www.munichre.com Munich Stock Exchange www.boerse-muenchen.de Sparkassenverband Bayern www.sparkassenverband-bayern.de Swiss Re www.swissre.com TVM www.tvmvc.com vbw Vereinigung der Bayerischen Wirtschaft www.vbw-bayern.de Versicherungskammer Bayern www.vkb.de Wirtschaftsprüferkammer www.wpk.de 3i www.3i.com Page 3: Erwin Huber, Bavarian Minister of Economics, Infrastructure, Commerce and Technology Pages 4/5: Panorama of Munich Pages 6/7: Munich Stock Exchange Page 8: Munich Re Page 9: Allianz Group Entrance Hall Pages 10/11: HypoVereinsbank Page 12: Small Atrium of HypoVereinsbank Page 14: Munich Stock Exchange Page 16: Baader Wertpapierhandelsbank Page 18: Bavarian Ministry of Economic Affairs, Infrastructure, Transport and Technology Page 20: Lecture Hall at the Technical University Munich Page 22: 3i Page 23: HypoVereinsbank Page 24: Airport Munich Franz Josef Strauß Picture credits: Bayerische Hypo- und Vereinsbank AG: Page 12 Bavarian Ministry of Economic Affairs, Infrastructure, Transport and Technology: Page 3 Jürgen Stein, Phase 4 Communications GmbH: Pages 6/7, 8, 10/11, 14, 16, 17, 18, 19, 20, 22, 23, 24, 27 Allianz AG : Page 9 Getty Images : Pages 4/5

www.fpmi.de Financial Center Munich Initiative c/o Munich Stock Exchange Lenbachplatz 2a 80333 Munich Germany E-mail: kontakt@fpmi.de