Thursday 25 April 2019 11:41 am

Deutsche Bank and Commerzbank merger talks collapse


Reporter at City A.M. covering banking, markets and insurance

Reporter at City A.M. covering banking, markets and insurance

Follow Callum
Merger talks between Germany’s two largest lenders Deutsche Bank and Commerzbank have collapsed.

Deutsche Bank said discussions had been abandoned as there were too many risks attached to the potential merger.

The pair began talks last month after the German government, which owns a 15 per cent stake in Deutsche Bank, signalled it would not object to any necessary cost cuts or job losses.

Berlin has pushed for the merger in a bid to create a national banking champion after becoming concerned over the health of both banks.

The merged bank would have become the Eurozone’s second largest lender behind BNP Paribas, with around €1.9 trillion (£1.6 trillion) in assets and a market value of €25bn.

The potential tie-up faced vociferous opposition from trade unions – with 30,000 jobs under threat – and was also criticised by investors and analysts.

Deutsche Bank confirmed talks had collapsed and said the merger did not carry enough benefits to offset execution risks, restructuring costs and capital requirements needed for the deal.

The bank’s executives had discussed raising between €3bn and €10bn for the proposed merger, according to reports.

In a statement, the Deutsche Bank said: “After careful analysis, the management board of Deutsche Bank has concluded today that a combination with Commerzbank would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements association with such a large-scale execution.”

Italian lender Unicredit could now be poised to strike with a rival bid and has already begun preparing a bid, according to reports.


Italy’s second-biggest bank has developed plans to buy a large stake in Commerzbank and merge it with another German lender under its ownership, HypoVereinsbank, the Financial Times first reported earlier this month.

Share


Tags: