Partnerships / Acquisitions

Deutsche Bank, Commerzbank Confirm Merger Talks

Deutsche Bank confirmed on Sunday (March 17) that it’s in talks with Commerzbank about a deal.

In a memo from Deutsche Bank Chief Executive Christian Sewing, he said that — given the ongoing rumors for months now — he thought it was important to provide context. He noted that while the company has been making progress during the last couple of months in its turnaround, it has also been assessing its opportunities as they come up. With a stated mission to remain a global bank with a big capital markets business, Sewing said it’s important to pursue options that make economic sense to the company. As a result, the board of Deutsche will review its options, including a deal with Commerzbank.

“It is our responsibility, and it is our duty. In doing so, we will keep the interests of the bank and all of our stakeholders in mind,” wrote the executive in the memo. “At this point in time, there is no certainty at all that any transaction will materialize. Experience has shown that there may be a lot of potential economic and technical factors that could hinder or prevent such a step.”

The idea of the two German banks merging started in 2016, prior to either bank going into restructuring mode. The government of Germany has urged the two to complete a tie-up, due to the ailing health of Deutsche Bank. The government is aiming to create a national bank that can support the economy, which is export-focused. If it happened, Reuters reported that it would be the third-biggest bank in Europe with $2.04 trillion in assets. HSBC and BNP Paribas would be the only two European banks to trump it in assets.

While the German government is optimistic it can reach its goal, skeptics aren’t so sure. Gerhard Schick, finance activist and ex-member of the German parliament, told Reuters that this isn’t the creation of a winning national bank, “but a shaky zombie bank that could lead to another billion-euro grave for the German state. Why should we take this risk?”

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