Germany as a business location: Challenges and opportunities in 2026

A glass elevator takes visitors to the 48th floor, and at 259 meters, Commerzbank's headquarters are Frankfurt's tallest building. When it opened in 1997, Michael Kotzbauer had already been with the bank for seven years. Since 2021 he has served as the Board Member responsible for Corporate Clients, and since 2024, the Deputy Chairman of the Board. The financing and advising companies part is the most important business of Germany’s the second-largest commercial bank.

The decisions on the Board have been made under reservation for more than a year. In September 2024, the Italian major bank UniCredit acquired a stake in Commerzbank and currently controls just under 30 percent of its shares. UniCredit boss, Andrea Orcel, left no doubt that the ultimate goal of the operation was a complete takeover. However, both the management and German politics aim to prevent this. The strategy here is that the share price should rise to such an extent that UniCredit can no longer afford the takeover. To achieve this, Commerzbank has set ambitious targets. They are particularly ambitious in their targets for the Corporate Clients business. However, as this segment is weakening, doubts surrounding this promise have increased.

Mr. Kotzbauer, do you still hear the many complaints from entrepreneurs about Germany as a location?
Every year I have several hundred appointments with clients, ranging from DAX corporations to medium-sized companies. These topics also come to me. However, this was already the case last year and the year before.

And what do you say then?
I have been in the corporate client business for more than thirty years. During this time, I have experienced some exceptionally challenging phases, such as the financial crisis starting in 2008, or the outbreak of the COVID-19 pandemic. Back then, many initially did not know how things would continue. And then, things unexpectedly picked up again quite quickly.

Does that mean the next upswing is a certainty?
Something is different: past crises often began with sudden downturns. In contrast, we have entered into the current situation more gradually. The conditions for business locations have continuously deteriorated. As a result, the country sometimes appears paralysed.

Economists are registering a few bright spots right now. Do you see them too?
Yes. We notice them in the field of infrastructure, renewable energy, and especially in the security and defence industries. The fact that the momentum comes primarily from the public sector is, of course, also a consequence of the investment packages of the Federal Government.

Does it still look bleak in the private sector?
You know, we hold a conference in the U.S. every January. At this event, larger, listed companies from Germany will present themselves to institutional investors. In conversations with their representatives, the mood wasn’t euphoric, but it wasn’t desolate either. For many companies, the last few weeks in 2025 have gone well or at least reasonably well.

However, many of these companies generate the majority of their revenues abroad.
That’s correct. And we also notice that some see better prospects abroad and are investing there. However, what gave me hope at the conference, was that investors from the U.S. are very interested in Europe this year and especially in Germany.

Do you see something we don't see?
They recognise that Germany is an interesting economic area with a strong industrial base, a high level of innovation and stable political conditions. These are the most important foundations for investment.

German-export dependent companies are also currently suffering from the weak dollar.
Yes, we are therefore seeing a very high demand for hedging. For many years, we have been advising companies to be prepared for fluctuations in currencies, commodity prices and interest rates. If they have taken this into consideration, the risks are manageable.

Have you conducted a stress test on the impact of the weak dollar on your customers?
We continuously run various stress tests with different scenarios across our portfolio.

Which industries are currently being particularly strongly affected by this?
We are also looking at sectors, but for us they are only one of several categories. Our risk provisioning has barely risen recently, and our loan portfolio is very solid. The fact that many companies are very resilient is also a long-term consequence of the COVID-19 pandemic. At the time, they worked intensely on their liquidity, capital and costs.

The number of bankruptcies is still rising.
Yes, especially among small businesses – smaller companies with a turnover of less than 15 million euros. Every insolvency is unfortunate, but smaller cases weigh less on our results. Of course, there are some larger challenges, but even in the automotive industry, most companies are financially stable.

Just a few weeks ago, the Bundesbank warned that more loans defaults could even threaten the stability of banks.
We have known many of our clients for decades, have always worked very closely with them and addressed critical issues at an early stage.

Is there still a risk of a major wave of bankruptcy?
We have now been in an economic stagnation for more than three years. If conditions for business locations do not improve, this will eventually have serious consequences for industry. 2026 is likely to be a decisive year. Later, reforms may become more difficult because of the upcoming Bundestag (Federal) election.

What needs to happen?
This has been known for years: anyone who wants to open a new location or expand their company often encounters bureaucratic hurdles. And just try to get specialists to Germany – it is not easy. Overregulation not only burdens German companies, but also foreign investors.

We have heard this for years, but little happens.
Change is also about mindset. We need to understand that we are competing with other locations for investment. We need to measure ourselves against them and aim to be better and faster.

Do you see that the government is pursuing this goal?
Chancellor Friedrich Merz has recognised the right issues and occasionally addresses them clearly. It is important to move into implementation quickly.

Commerzbank has very ambitious growth targets and aims to lend more in its Corporate Clients business. How will this work if investment stagnates?
We have not stagnated. In 2025, our lending volume rose by 10 percent to 115 billion euros. We have grown stronger internationally, and domestically.

Because you are undercutting the competition with particularly favourable conditions?
No. No other bank is as closely connected with German SMEs as we are. We have grown across all client groups and have ambitious targets in the private and corporate client business this year. We want to increase loans and commission income.

Is there, so far, no reason to adjust these objectives?
No, on the contrary. As a bank, we have recently confirmed our multi-year targets as minimum targets. I am therefore confident. We see Germany, Austria and Switzerland as our home markets, but we are also active in more than forty other countries. International business is an important part of our growth history.

After the collapse of Credit Suisse, your Swiss country head said that Commerzbank wanted "a big piece of the pie." How much did you absorb?
Since then, our business in Switzerland has grown at double-digit rates every year. We now have around a hundred employees here, which has strengthened the workforce by around a third. We are currently providing EUR 15 billion for financing. Growth is also very positive for this year.

In surveys, only a minority of Swiss entrepreneurs say they want to work with a foreign bank.
We have been active in Switzerland since 1985, and a good ten years ago we made it one of our core markets. Even then, we realised that there was a gap for us between the two major institutions and the smaller cantonal banks, for example in areas such as trade finance, in which we have extensive experience. After such a long time, we can credibly claim our position there, especially since we have significantly expanded our offering.

The Italian major bank, Unicredit, says similar things about its activities in Germany. Since it acquired a stake of just under 30 percent, Commerzbank has expressed doubts about the credibility of its promises.
UniCredit has been active in Germany through Hypovereinsbank for twenty years. We know and respect them as competitors. However, we want to further develop Commerzbank as an independent company, because our clients very clearly want this.

It goes without saying that they want to have a broader offering. I also prefer having three rather than two bakers in the neighborhood.
I don’t think that’s all it’s about. Commerzbank has always distinguished itself by being reliable at the side of its clients. That is our culture, that is the foundation of our strength.

And you already know that all this would be lost in one go after a takeover?
When I speak to entrepreneurs or to medium-sized companies, the highest decision-maker in the Corporate Clients segment at Commerzbank is speaking directly with its clients. That's precisely the difference that matters to them. They know they can call me on my phone if something’s not working. Our clients know that we understand them and make decisions about their concerns in Frankfurt and not at a corporate headquarters abroad.

Some companies are consciously clients of Unicredit and Commerzbank. Do you notice that they are choosing a bank because they expect a merger?
We notice that business is shifting in our direction. Our clients not only say that they want to have a commercially successful Commerzbank, but they’re also acting accordingly.

Currently, there seems to be a kind of stalemate between Commerzbank and Unicredit. How long will your employees tolerate this?
For many, we have already been on a long journey together. By the end of 2020, something had to happen. We then successfully and significantly restructured the bank by 2024. I sense that colleagues identify strongly with Commerzbank and are motivated to make it even more successful.

At least that seems to be the case with you.
Of course. I've been here since 1990. What do you expect?