Commerzbank and Deutsche Bank merger rumour shot down but German lenders' share prices still up

Hayley Kirton
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A Deutsche Bank building Stands next to
Alas, these two are unlikely to get together any time soon (Source: Getty)

Shares in two big names in German banking are currently riding high on rumours of a merger, even though they have since been denied.

Reports from local media that Commerzbank and Deutsche Bank could be heading towards a tie-up were shot down this morning, after the latter's chief executive John Cryan told a conference he didn't see his company taking part in any large mergers any time soon.

Despite the rumours quickly being brushed away, investors were still excited. Shares in Commerzbank are currently trading up four per cent at €6.34. Meanwhile, Deutsche Bank's share price is trading up 4.1 per cent at €13.40.

Although he ruled out grand manoeuvres for his own bank, Cryan still told the conference he thought more M&A activity in the banking sector was needed.

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"We need more mergers, at a national level, but even also across national borders," he said. "Only then can we be profitable in the long run."

Deutsche Bank declined to comment further on Cryan's speech. Commerzbank also declined to comment.

The two partners that could have been performed similarly in recent stress tests from the European Banking Authority. This found that Deutsche Bank's tier one capital ratio would be slashed to 7.8 per cent in the event of a sharp economic downturn, while Commerzbank's would fall to 7.4 per cent.

However, Deutsche Bank, which reported a 98 per cent drop in net income for its second quarter of 2016, did not fare so favourably in the US stress tests in June, as it was one of the only two companies to fail.

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