Deutsche Bank and Commerzbank are in negotiations for a possible merger, the two banks confirmed on Sunday afternoon. For months there is speculation about a merger of the two institutions.
Finance Minister Olaf Scholz (SPD) and his prime minister, former Goldman Sachs head of Germany Jörg Kukies, have repeatedly confirmed that Germany needs strong banks. The German government is "open to economically meaningful opportunities."
Kukies alone met, according to official figures, nearly two-dozen times last year with Deutsche Bank's senior representatives. In Commerzbank, the federal government has expressed its shareholding of almost 15 percent as it has had since the financial crisis.
According to media reports, Scholz and Kukies had urged bank managers Christian Sewing (Deutsche Bank) and Martin Zielke (Commerzbank) to consider merging – ideally before the European Parliament elections in late May.
Politics' concern: Europe's largest economy lacks a strong international bank. While US competition has long served well, Germany's big banks have spread ten years after the financial crisis.
Heavily banking market
The German banking market is traditionally highly competitive, low interest rates in the euro area and high legal costs make it more difficult for the industry to make money. In addition, homemade problems such as expensive legal grants came with the German bank.
After three years of consecutive losses, Germany's largest financial institution has just returned to profitability in 2018 with a profit of 341 million euros. However, Deutsche Bank is miles away from the glittering billions of profits – as well as the stock price of previous highs.
Although Commerzbank earned about two and a half times as much in the past year as Deutsche Bank (865 million euros), it does not see its goal in the company's restructuring, including job cuts. The institute even rose from DAX to MDax in the fall, considering an equally strong shortened share price.
Whether a merger of the two houses would be the solution to the problems is disputed by experts. Above all, it is doubtful that the battered Deutsche Bank and Commerzbank during the reconstruction would be the "national" with much more emphasis on the international stage the politicians want.
Undoubtedly, in a larger entity, costs can be reduced in the long term, and the mega-subject of digitization can be accelerated by the institutes. But thousands of jobs would be on the brink, at the headquarters and the branches a merger would certainly not pass without a trace.
(APA / dpa)