Why Europe Must End Its 30-Year Digital Winter to Ensure Its Long-Run Future

Report: Commerzbank and Deutsche Bank Ressurect Merger Talks

Deutsche Bank

Deutsche Bank has reportedly resumed merger discussions with fellow German financial institution Commerzbank.

The two companies had called off their initial plans to merge five years ago. But now, Reuters reported Monday (Jan. 15), uncertainty in the bank sector and Germany’s need to shore up its budget has renewed speculation about a tie-up.

According to the report, Germany has said it is considering raising funds by selling stakes in some of its 100-plus state-owned companies, including its 15% share of Commerzbank.

While a sale of that stake isn’t guaranteed, the report says Finance Minister Christian Lindner is open selling and ultimately would prefer the government give up the stake, according to a source familiar with his thinking.

This source said that merging with Commerzbank would let Deutsche Bank shift further away from investment banking earnings, strengthening its longer-term stability and making it a more attractive buyer in the eyes of the German government.

As reported here late last year, the European Central Bank is slowing the pace of interest rate hikes, which has triggered greater competition for deposits and forced lenders to increase what they pay to attract savers.

Raising fee revenues will be “a focus point of our growth initiative” for the next several years, Bettina Orlopp, finance chief at Commerzbank, told Bloomberg News, adding that the bank is focusing on expanding its asset and wealth management units.

Many other European banks are following suit, using their recent earnings presentations to tell investors they’re spending on aspects of their business that don’t depend on lending revenue — such as insurance, private banking and payments — as they expect interest income to peak.

Commerzbank announced last week it was working with Global Payments to offer digital payment solutions to small and to medium-sized businesses (SMBs) in Germany.

The companies have formed Commerz Globalpay GmbH, which is set to launch in the first half of this year and will present merchants with a suite of omnichannel payment and software solutions, Commerzbank said in a news release.

“Commerzbank brings the knowledge and customer relationships within the German small- and medium-sized business market, while Global Payments brings commerce enablement solutions and distinctive payment offerings,” the release said.