HypoVereinsbank launches growth offensive in construction industry

• Loan volume expected to rise 30% to over EUR 7 billion by the end of 2011
• Target: Customer growth of more than 20% by the end of 2012
• Joint study with Roland Berger reveals strategic challenges facing the German construction industry and high demand for investment capital

HypoVereinsbank wants to significantly expand its market share in the German construction industry. In this year alone, HypoVereinsbank wants to boost its loan volume in the sector from approx. EUR 5.5 billion to more than EUR 7 billion, an increase of 1.6 billion or 30%. The bank expects to achieve this increase in lending by acquiring new customers, coupled with considerable growth among its existing customers.

Lutz Diederichs, HypoVereinsbank Management Board member responsible for Corporate & Investment Banking: "By growing our customer relationships, we can actively leverage our existing credit strength to significantly increase our market share in the highly attractive German construction industry. By the end of 2012, HypoVereinsbank wants to increase the number of large construction companies it counts among its regular customers, from the current 480 to approximately 600 companies, or over 20%."

HypoVereinsbank also wants to hire more people to support companies in the construction industry. Over 100 specially trained industry experts will be working for HypoVereinsbank this year, representing an increase of roughly 5% compared to 2009. Lutz Diederichs: "Our employees are to be deployed in our core regions, Munich and Hamburg, but also at our locations in Düsseldorf, Frankfurt and Stuttgart. This is where we want to achieve particularly strong growth."

HypoVereinsbank's growth initiative in the construction industry is also the result of a study conducted with strategy consultancy Roland Berger, entitled "Strategies for the German construction sector – Seize opportunities and master risks". This comprehensive analysis closely examines the strategic challenges facing German construction companies and demonstrates that the industry hit rock bottom back in 2005. Yet despite its upward trend since then, the industry's growth potential in Germany is very limited: it will grow by just one percentage point per year between now and 2015.

Competition among construction companies will become more intense for a couple of reasons: structural trends, such as the increasing professionalization of customers, and the stronger presence of foreign competitors on the German market. As Kai-Stefan Schober, Partner at Roland Berger Strategy Consultants, says: "German construction companies are therefore faced with the daunting task of strategically realigning themselves – whether by making their business international, offering different construction-related services such as facility management and industry services, or by expanding into new business areas."

According to the Roland Berger study, there are five different business models in the German construction industry:

• International construction groups
• Broad-based SMEs
• Local/regional construction companies
• Specialists in traditional construction (such as rail, prefab, and hydraulic engineering)
• Specialists in building services engineering

Each of these segments is confronted with certain strategic challenges. International groups have to refine their business portfolio regarding concessions and services, penetrate new growth regions and better tap synergies between different business units. Broad-based SMEs could perhaps open up profitable new areas – e.g. green tech or sustainable real estate management – by developing an additional specialty or entering a niche segment. Local and regional construction companies have to hold their own mainly against the SMEs. To do so, they must become more professional, expand their competencies and form sourcing alliances to combat rising raw materials costs, for example. By contrast, specialists need to be masters in their market segment and set themselves apart from the competition through perfectly tailored solutions.

Kai-Stefan Schober: "There is solid growth potential in the German construction industry as long as the proper strategies are pursued. Expanding the product portfolio to include construction-related services, specializing in green tech, sustainable real estate management or concessions and internationalizing the business – these are crucial steps construction companies must take to be successful in the market. Over the next few years, the industry will need fresh capital to follow through on those steps."