Deutsche Bank in merger talks with Commerzbank

Deutsche Bank/Bloomberg

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The talks are informal and the supervisory boards of the companies have not given a mandate to pursue a deal.

Sunday 10, March 2019

(Bloomberg) --Deutsche Bank and Commerzbank are intensifying discussions about a potential merger as their turnaround efforts sputter and after the German government put pressure on the firms.

Deutsche Bank is still considering other options though a deal has become more likely as Chief Executive Officer Christian Sewing has given up resistance, people familiar with the matter said.

Less than a year after taking over, Sewing is struggling to reverse a long slide in revenue amid a slowdown in the economy that is delaying a return to more normal interest rates.

Germany finance ministry had favoured a merger of both lenders before the situation gets worse to support the small and mid-sized companies that are the backbone of the export economy, people familiar with the matter have said.

Deutsche Bank in February reaffirmed its 2019 profitability target but also made clear that it would need to implement tougher measures if markets do not play along and revenue continues to decline.

The bank is now also planning to implement tougher cost cuts as one step to ensure it can reach the profitability target, they said. Other options include a merger with another European bank though that is seen as remote.

The two companies previously discussed a merger in the summer of 2016 under then-Deutsche Bank CEO John Cryan. Sewing was part of those discussions as head of the retail division at the time. The talks fell apart, largely because the banks agreed that it was impossible to put a value on Deutsche Bank’s legal risks, according to a person who was part of the discussions, and the lenders embarked on their respective restructuring

 

TAGS : Deutsche Bank, Commerzbank, mergers and acquisition

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