Possible merger of Deutsche Bank and Commerzbank

Published on: 18-Mar-2019
Category: Trading
Last updated: 18-Mar-2019

Possible merger of Deutsche Bank and Commerzbank

For a year there have been rumours of a merger between Deutsche Bank and Commerzbank. Now for the first time, Federal Finance Minister Olaf Scholz has made a public statement on the occasion of a meeting of Euro finance ministers. He confirmed that there were "consultations on the situation".
The two banks, which are among the fourth largest banks in Germany, have been in a bad state for some time and could now try to make themselves profitable again through a merger. Deutsche Bank is struggling with declining revenues and the legacy of failed expansions in its balance sheets, and since the financial crisis the German government has held a 15% stake in the bank by rescuing Commerzbank.
The possibilities of a merger range from a complete takeover of Commerzbank to a merger between equals and a partial merger.

For a merger to make sense, both the bank itself and its environment would have to change. To this end, the successful and innovative business areas should be merged and the unprofitable areas rationalized away. So not only the balance sheet total of the two banks will be added up and the financial stability of Germany endangered, but also branches will be closed, up to 40000 employees will be laid off and entire business areas will be divested.
There are several ways in which the two banks could merge, but this must soon be established. On March 21, 2019, the Supervisory Boards of Deutsche Bank and Commerzbank will hold recurring meetings. A merger or the like can then be placed on the agenda of the annual general meetings of both banks, which are scheduled for the end of May. Until then, however, they still have to convince the bank supervisors of the European Central Bank of their intention.

However, the merger of Commerzbank and Deutsche Bank does not convince everyone yet. The ECB supervisors have just announced through the Financial Times that they are wondering whether Deutsche Bank's managers have enough "ruthless brutality" to successfully manage a merger and bear the consequences. If the merger of the banks goes wrong, the problems will only get worse. The bank supervisors would only support such a plan if there was a good plan behind it.



Trading Deals

More interesting posts