Not content with usual vendor financing, industrial conglomerate Siemens has obtained a bank license from the German Federal Financial Supervisory Authority. Siemens Bank will support the group’s industry, energy and healthcare operating sectors with corporate and state sector customers.
“By having our own bank, we will be in a position to offer investment loans and project financing from Germany and, as a result, will provide sustainable support to vendor finance. We can be more flexible, and finance longer-term transactions,” Roland Chalons-Browne, CEO of Siemens Bank, told Treasury Today, continuing, “The financial crisis has once again clearly demonstrated how important it is for global corporations to think about crisis scenarios and to create the necessary latitude, degree of freedom and risk-management instruments at an early stage. This applies to both vendor finance and the financing of the Group itself. One aspect in this context is to get access to the central bank and the option of safely parking liquidity there or obtaining refinancing.”
The new bank will primarily serve corporate customers, project companies and public-sector bodies. In terms of deposits, the bank will raise funds from institutional investors, as well as other arms of Siemens. With €250m initial equity capital, it can grant individual financings of up to €60m, and build a balance sheet of over €2 billion.
By operating in sectors like renewable energy, Chalons-Browne claims the company is showing “financial leadership” in an area from which other financial institutions have withdrawn. “To be competitive, Siemens Bank will concentrate on financing areas in which it has an in-depth expertise, and these areas are quite naturally located around the Siemens sectors,” the CEO explains.
The bank will also steer clear of real estate finance, sticking to funding clients in its existing business areas. The bank will be wholly owned by Siemens, but will operate as an independent, “arm’s length” entity. Initially, it plans to operate solely in Germany.