Banking

Germany Pushes For Commerzbank, Deutsche Merger

The German government is looking at a merger as a way to fix scandal-ridden Deutsche Bank.

According to Bloomberg, sources have revealed that officials — including Finance Minister Olaf Scholz and Deutsche’s CEO Christian Sewing  are in the process of studying ways to make it easier for Deutsche to merge with Commerzbank. One topic includes the possibility of changing existing laws to make a merger less costly.

“The business models of both banks are complementary and it would be good for scale,” said Markus Kienle, deputy CEO of SdK, a German association that represents retail shareholders. “But both banks are in trouble. The restructuring costs would lead to years of no dividends, and so we think the disadvantages of a merger would currently outweigh its advantages.”

Other possibilities being considered include looking for new investments from existing or new shareholders.

Despite a recent large sell-off of its stock, Deutsche denied earlier this month that it is a takeover target, following a two-day raid of its offices during a money laundering investigation. In fact, its CEO told a local German paper that it would not happen.

“I don’t have any indication of that,” Sewing said. “We are on track to make our first profit for three years. It is only a matter of time before this progress is reflected in the share price.”

He also pointed to media reports that said the bank would consider a merger with UBS or Commerzbank and called them  “fictions.”

Late last week, federal authorities in Germany raided six Deutsche offices, searching for evidence of an investigation centered on two unknown bank individuals, as well as others who are under suspicion for helping customers create tax havens out of the country. While the bank doesn’t know the full range of the investigation, it said it was cooperating with authorities.

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