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02/26/2019

03:36 PM

Oliver Bäte

Allianz CEO joins the call for European industrial strategy

By: Christian Schnell, Carsten Herz, Darrell Delamaide

The head of the EU’s biggest insurance company talks about making European companies globally competitive at a time when the US and China are getting all the attention.

REUTERS

Allianz for an alliance.


The head of Europe’s largest insurance company, Allianz, thinks Europe needs to focus.

“Every big country overseas is asking itself the question, where is the economy going in 20 years?” Oliver Bäte said in a wide-ranging interview with Handelsblatt. “What are the five or six key industries, and how can we make certain we’re playing in this game?”

Bäte is among a growing number of chief executives who want national European leaders to concentrate their energies into a concrete industrial strategy, get beyond petty thinking, and join forces to compete with rivals, notably China and the United States. At the urging of Chancellor Angela Merkel, EU leaders will hold an industrial policy summit next month.

But Bäte and executives including Christian Sewing at Deutsche Bank, Timotheus Höttges at Deutsche Telekom and Joe Kaeser at Siemens want the EU leaders to go beyond talking, and actually make policies.

France and Germany have worked together to change antitrust policy so the EU council of national leaders can overturn decisions by the European Commission. The commission’s decision to block the merger of Alstom with Siemens’ rail operations, which could have then better competed with China’s national rail company, rankles the leaders, who consider the decision too narrowly focused on European competition.

“Europe is somewhat naive on this point,” Bäte said. The Allianz CEO supports German Economics Minister Peter Altmaier's call to create both national and European champions. “We have been giving this far too little attention,” Bäte said.

Standing up to China: Brussels urged to allow European ‘champion’ firms to emerge

Standing up to China

Brussels urged to allow European ‘champion’ firms to emerge

Wary of Beijing’s intentions, German business is pressing the EU to loosen competition rules to boost its corporate might against Chinese rivals.

In this context, Bäte said it makes sense to look for ways to restore Deutsche Bank to its role as a flagship for the German economy. Whether that is through a merger with another bank like Commerzbank is up to the institutions to decide.

“But it would be naive to think that Germany as an economy can be successful without a big, internationally active bank,” Bäte said. “Certainly we need a big, strong private bank in Germany — just as we need a big, strong insurance company in this country.”

For the insurance executive, this doesn’t undercut his desire for consolidation at the EU level. “I would find it really good if we weren’t only making plans for a banking union,” he said, “but also for a European energy strategy, a defense strategy and a technology strategy.”

The trade conflict between the US and China poses the biggest current threat to the global economy, in his view. China's transition to a consumer-focused economy is exposing a lot of debt that had been hidden and forced some insurance companies to draw back. This presents Allianz with an opportunity, Bäte believes, because the Chinese don’t have any pension insurance schemes.

“It’s our guess that precisely this know-how we have in Germany for pension insurance and occupational pensions could be very appealing to Chinese consumers,” Bäte said.

For now, however, Allianz remains cautious about China. The general insurance market is difficult to crack given the penetration of the Chinese giants, so Allianz is focusing on platform services.

As to whether Chinese insurance giant Ping An might try to enter the German market after acquiring Berlin fintech startup Finleap, Bäte was dubious. “I would be very surprised,” he said. “I think the opportunities for the Chinese group are so large in Asia that Ping An would do well to look into those first.”

Carsten Herz heads wealth management coverage for Handelsblatt and Christian Schnell covers investing. Darrell Delamaide adapted this article into English for Handelsblatt Today. To contact the authors: [email protected] and [email protected].

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