RiskTech Forum

Deutsche Bank and Commerzbank In Merger Talks

Posted: 19 March 2019  |  Source: zephyr

Deutsche Bank has confirmed that discussions are underway which could lead to a merger with domestic peer Commerzbank.

The company said it is currently in the process of reviewing its strategic options with a view to improving its growth profile and profitability.

However, it cautioned that there is no guarantee of a deal being reached.

Christian Sewing, chief executive of Deutsche Bank, has gone as far as to issue a letter to all employees, saying that he hopes to provide staff with some context in the wake of constant rumours.

He noted that the company’s goal is to be a global bank with strong capital markets, based on a leading position in Germany and throughout Europe, and as such, only options which make sense from an economic standpoint will be considered.

Sewing cautioned that a number of economic and technical factors could obstruct a combination of the two companies.

Potential hurdles outlined in a Financial Times (FT) report include the fact that any merger would need the seal of approval from both parties’ supervisory boards, while certain Commerzbank assets would have to be revalued at current market prices.

In addition, a deal would need funding, while there are concerns that a transaction could distract Deutsche Bank’s senior management at a time when it is still trying to integrate Postbank, which it has majority-owned since 2010 and wholly-owned since late 2015.

The potential merger is also being opposed by unions, with DBV leader Stephan Szukalski cited by the FT as saying the move would be a “grave mistake”.

Nevertheless, this is not the first time Deutsche Bank and Commerzbank have been linked; in August 2016, Handelsblatt said the latter could be a target and that talks had taken place.

According to Zephyr, the M&A database published by Bureau van Dijk, there have been 31 deals worth a combined USD 9.86 billion involving a merger of commercial banks announced worldwide since the start of 2019.