Acquiring a Bank or Financial Institution in Germany

Acquiring an existing bank or financial institution in Germany may be an attractive route for investors, financial groups and FinTech companies seeking access to the German or European financial market. Instead of applying for a new licence and building the entire regulatory infrastructure from the ground up, a purchaser may acquire an existing institution with established governance structures, compliance processes, employees, systems, contracts and, where applicable, passporting rights within the European Economic Area.

The transaction is rarely a simple purchase of a “licence”. In practice, the purchaser usually acquires the shares in the regulated entity, while the regulatory permission remains with the institution itself. This makes the acquisition of a German bank, investment firm, payment institution or other regulated financial institution a combined M&A and regulatory project. The commercial rationale is often not only the existing business of the target, but the possibility of using the institution as a regulated platform for new products, cross-border services or a broader European market entry strategy.

Regulatory Approval Requirements

The acquisition of a German bank or financial institution is subject to regulatory requirements that must be analysed at an early stage of the transaction. Where the purchaser intends to acquire a qualifying holding, or to increase an existing holding beyond certain thresholds, prior notification to the competent supervisory authorities may be required. For credit institutions, the ECB describes a qualifying holding as generally arising from a participation of 10% or more, or where significant influence can otherwise be exercised; prior authorisation may also be required when certain thresholds are crossed.

The supervisory assessment is not limited to the target institution. The authorities will also review the proposed acquirer, its ownership structure, reputation, financial soundness, business plan and the future governance of the institution. In Germany, this process is closely connected with BaFin and the Deutsche Bundesbank, while acquisitions of qualifying holdings in credit institutions within the Single Supervisory Mechanism involve the ECB’s assessment framework.

Key Due Diligence Considerations

Due diligence in the acquisition of a regulated financial institution must go beyond ordinary corporate, commercial and tax review. The purchaser should pay particular attention to the scope and stability of the target’s regulatory authorisation, its customer contracts, its compliance framework, AML procedures, outsourcing arrangements, IT systems, internal controls and historic correspondence with supervisory authorities. The decisive question is not only whether the institution currently holds a licence, but whether it can lawfully and sustainably support the purchaser’s intended business model after closing.

From an M&A perspective, regulatory findings may have a direct impact on valuation, transaction structure, conditions precedent, guarantees, indemnities and post-closing integration. A target with a licence but weak governance, unresolved supervisory findings or insufficient compliance resources may require substantial remediation before it can be used as a reliable platform. Conversely, an institution with robust systems, experienced staff and a clean regulatory history may offer significant strategic value to a purchaser entering the German or European market.

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Kronsteyn advises domestic and international clients on the acquisition and sale of banks, investment firms, payment institutions and other regulated financial institutions in Germany. Our work combines transactional experience with financial regulatory expertise. For investors seeking to acquire a regulated platform in Germany, we provide legal support from the first structuring considerations through to signing, closing and post-acquisition implementation.

Your contact person for regulatory matters: Dr. Hendrik Müller-Lankow; your contact person for M&A: Dr. Gero Kollmer.