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September 13, 2000

DAB: broking in Germany extends its European reach

Yet again, a German online broker is hitting the headlines. Direkt Anlage Bank's proposed acquisition of the French online broker, Selftrade, gives it instant access into key European markets. The move strikes a blow to DAB's German rivals, as well as to the competition in other countries, all of whom are also striving for pan-European supremacy.

By CBR Staff Writer

DAB is to pay E900 million for Self Trade.

German online brokers are driving nearly all the developments in the European online share trading market. ConSors, comdirekt, DAB and Deutsche Bank have all seen significant success in their domestic markets and are now all pursuing rapid expansion in a bit to exploit the huge opportunities across other European countries. Virtually every month, one of these players is making a new announcement in the struggle to outdo one another. They have all raced to develop the first online fund supermarket, to be the first provider to offer trading over mobile phones, to be the first to expand into insurance broking and be the quickest to expand into Europe. DAB has made the next move.

The drivers behind this market development are differentiation and growth. As competition intensifies, companies need to stand out from the crowd. For the German brokers, competing in one country has probably helped them. Their intense competition has caused them to be constantly innovative in new developments, offer low prices and guarantee excellent customer service. This has resulted in substantial growth and profitability for all the companies.

In terms of growth, the German companies are exploiting the current boom in their domestic market. German retail investment in equities has risen from E57 billion in 1990 to E250 billion in 1999. Datamonitor forecasts this will continue to grow at an average of between 15% and 20% annually from 1999 to 2004.

However, although these potential revenues are large, the real pot of gold lies in Europe. With relatively weaker competition in these markets and strong growth forecast, both in equity and fund investment, the German brokers see pan-European supremacy as the real goal.

DAB’s acquisition of Self Trade sounds the next warning note in the battle of the German brokers, and sends out a challenge to foreign brokers with pan-European intentions, such as Charles Schwab, Cortal and E*Trade. However, there will undoubtedly be much more activity in the market over the coming weeks and months.

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