DaimlerChrysler to Create Global Financial Services
20 January 1999
DaimlerChrysler to Create the Fourth Largest Non-Bank Provider of Global Financial Services
-- DaimlerChrysler services (debis AG) announces best results in its history
-- Another important milestone in DaimlerChrysler's rapid integration
BERLIN, Jan. 20 -- DaimlerChrysler, the international
automotive, transportation and services company, today announced the creation
of a new financial powerhouse by combining its global services operation into
one integrated financial services provider within DaimlerChrysler Services
(debis) AG. Headquartered in Berlin, the company will have a portfolio of
DM 138 billion ($ 81 billion). It will be the fourth largest provider of
financial services in the world outside the banking and insurance sector.
"We are forming a new financial services powerhouse which combines the
innovation, know-how, market position and financial strength of
DaimlerChrysler", said Dr. Klaus Mangold, member of the Board of Management of
DaimlerChrysler AG and Chairman of the Board of debis AG. "The integration of
financial services just 40 working days after "Day One" demonstrates once
again the rapid pace of DaimlerChrysler's business combination."
DaimlerChrysler Services (debis) will play an important strategic role
within the DaimlerChrysler group. In 1998, debis and the financial services
subsidiary of Chrysler report combined revenues of DM 23.8 billion
($ 14 billion) and employed 23,800 people. The newly combined financial
services business makes debis the second biggest earner in the DaimlerChrysler
group after the automotive businesses. The high profitability of both debis
and Chrysler Financial Company contribute to this strong position. In the
first nine months of 1998, debis reported operating profits of DM 550 million
($ 324 million), while Chrysler Financial Company reported an operating profit
of DM 881 million ($ 518 million).
Speaking at the annual debis press conference in Berlin, Dr. Mangold
reported outstanding results for last year. "1998 was a highly successful
year for debis with above average results in all areas and the best overall
results in the history of the company."
Mangold emphasized that the increased weight of financial services does
not reduce the importance of other debis businesses such as IT and Telecom
Services. "These businesses enjoy extremely dynamic expansion and will be
developed further," said Mangold. "Our business is now based on three strong
pillars: Financial Services, IT Services, and Telecom Services, making it
possible for debis to further exploit the dramatic growth in these future-
oriented markets."
In 1998, debis increased revenues by 20 percent to DM 18.5 billion
($ 11 billion) in 1998. Debis more than doubled its operating profit compared
with 1996 (DM 328 million, $ 193 million), based upon strong earnings growth
in all categories. debis also recruited more than 5,000 new employees,
increasing the size of its workforce to 12,000.
debis Financial Services headed by Dr. Mangold
The integration of financial services under the roof of debis will occur
in two steps: In North America, Mercedes-Benz Credit Corporation and Chrysler
Financial Company will merge to form "DaimlerChrysler Financial Services North
America." In Berlin, the Finanzdienstleistungs GmbH, will be incorporated
into DaimlerChrysler Services (debis) AG, the former services holding company.
This way, management structures will become even leaner and decision making
will be further accelerated. The newly formed Financial Services business
unit will directly report to Dr. Klaus Mangold.
Reflecting the stronger role of financial services will be two new
management board appointments. Darrell L. Davis, formerly Chairman of
Chrysler Financial Company L.L.C., now serves as Chief Executive Officer of
"DaimlerChrysler Financial Services North America," responsible for the North
American region. Georg Bauer, formerly President of Mercedes-Benz Credit
Corporation, is responsible for the regions Europe, Latin America, Africa and
Asia/Pacific, as well as Insurance and Trade Finance.
The worldwide headquarters of the debis Financial Services business unit
is Berlin. Activities in the North American region will be managed from
Southfield, Mich., the headquarters of Chrysler Financial Company.
debis now the fourth largest non-bank provider of financial services
worldwide
By integrating DaimlerChrysler's financial service activities, debis
becomes the fourth largest provider of financial services outside the banking
and insurance sector, with a portfolio of DM 138 billion ($ 81 billion) and
revenues of DM 16.5 billion ($ 10 billion). The strengths of debis and
Chrysler Financial Company integrate perfectly. Both companies have highly
successful automotive leasing and financing activities that promote the sales
of DaimlerChrysler products. The strongly North American-oriented former
Chrysler business also complement similar activities of debis in Europe and
Asia. As in the DaimlerChrysler automobile businesses there will be a clear
separation of brands in financial services, while achieving significant back
office synergies.
Beyond automotive financing and leasing, debis will focus on further
growth of non-automotive leasing and financing, such as ship financing,
aircraft leasing or the structuring and implementation of complex financing
models and fund packages. These activities will be integrated into a Capital
Services unit, based in Norwalk/Connecticut, the former headquarters of
Mercedes-Benz Credit Corporation, and Berlin. Capital Services is run by
William S. Bishop, formerly President and CEO of Chrysler Capital Company, and
reports directly to Dr. Mangold.
North America the biggest single market of debis
The combined financial services activities reinforces the importance of
the North American market for debis. According to a pro-forma consolidation
1998, the combined business of Chrysler Financial Company and debis achieves
40% of its revenues in the United States. For the Financial Services business
unit, two thirds of revenues are generated in the North American region. The
end of restrictions imposed by the Bank Holding Company Act in the U.S. also
opens up new business opportunities for debis IT Services in the USA. As a
first result, Freightliner, the biggest North American truck manufacturer and
part of DaimlerChrysler, awarded debis IT services the contract for the
reorganization and maintenance of its complete dealer network.
New business unit structure
The restructuring of all debis business activities into Financial
Services, IT Services and Telecom Services represents a new business unit
structure. The former debis Trading business unit is integrated into the
debis Financial Services business unit as Trade Finance. This means that the
scope of debis Financial Services extends to trading activities and is
reflected in the new organization, headed by Norbert G. Johanning as the
Vice-President of debis Trade Finance.
The real estate activities of debis Real Estate were transferred at the
beginning of the year to the finance department of DaimlerChrysler AG as the
Potsdamer Platz project in Berlin is now almost completed.
Corporate Profiles
Chrysler Financial Company L.L.C. (CFC)
Chrysler Credit Corporation was founded in 1964. CFC was formed as a
result of the merger in 1967 of Chrysler Credit Financial Corporation and
Chrysler Credit Corporation. In 1987, CFC acquired American Motors Financial
Corporation. As a wholly-owned subsidiary of Chrysler Corporation CFC
supplies financing and leasing to customers and dealers. Its product range
also includes property and casualty insurance for dealers. CFC has five
subsidiaries: Chrysler Capital Company, Chrysler Realty Corporation, Chrysler
Insurance Company, Chrysler Credit Canada Ltd. and Chrysler Commercial Mexico.
Chrysler Capital Company conducts the capital services business. It is mainly
involved in the structuring of tax leveraged leases, which are complex
financing models for large investments in various countries. Chrysler Realty
supports dealers by acquiring dealership real estate which is then leased by
the dealers and Chrysler Insurance provides insurance for dealers and their
customers. Chrysler Credit Canada supplies financial services to customers
and dealers in Canada.
CFC achieved revenues of DM 5.3 billion in 1998 with 3,800 employees and
manages a portfolio of DM 84.3 billion.
Mercedes-Benz Credit Corporation (MBCC)
MBCC was founded in 1974 as Freightliner Credit Corporation. The
company's name was changed to MBCC in 1983 and it is now managed by debis. It
controls and coordinates all activities of the debis Financial Services
business unit in the North American region and in South America. Besides
promoting the sales of the brands Mercedes-Benz, Freightliner and Sterling
Truck by means of leasing and financing services, MBCC also provides capital
services (non-automotive leasing and financing). In the context of the
strategic expansion of business activities in 1996 Remarketing Services of
America was acquired, which specializes in the sale of ex-leasing objects.
MBCC achieved revenues of DM 5 billion in 1998 with 1,350 employees and
manages a portfolio of DM 25.3 billion.
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