The two main banks in Germany, Deutsche Bank and its rival Commerzbank, have begun formal negotiations to study the possibility of a merger of the two entities. The announcement was made public this Sunday through two separate briefs published by the two entities, which states that there are no guarantees that the negotiations will finally conclude with a merger. If it occurs, would lead to appearance of a new giant in the banking sector.
"In view of the opportunities that present themselves, the Board of Directors of Deutsche Bank has decided to examine the strategic options. The Board of Directors will evaluate these options to determine if they strengthen the bank's growth and profitability. There is no guarantee that a transaction will be made. In this context, we confirm that talks are being held with Commerzbank, "said the statement released Sunday by Deutsche Bank, the first private bank in Germany.
In similar terms, Commerzbank has been expressed. In a brief statement, he confirmed that the two entities "have agreed today to start talks with an open result on a possible merger." According to the German media Der Spiegel, the supervision councils of the two entities plan to meet next Thursday to address those plans.
The official announcement of the beginning of the negotiations puts an end to a long period of speculation and confirms the rumors that have been circulating for months and that intensified in the past days. Local media also report that the federal government itself is driving negotiations and that the Minister of Finance, the Social Democrat Olaf ScholzI would have been pushing in that direction. The Government has a 15% stake in Commerzbank, which had to be rescued in 2008, following the bankruptcy of Lehman Brothers and after acquiring the Dresdner Bank.
A banking colossus
The Federal Minister of Finance, Olaf Scholz, and his Secretary of State, the former head of Germany for Goldman Sachs, Jörg Kukies, had reiterated repeatedly that Germany needs strong banks. The Federal Government was "open to economically sensible options," according to the German Finance Ministry.
According to the German agency DPA, Kukies met almost two dozen times last year with the main representatives of Deutsche Bank. According to this information, Scholz and Kukies would have urged the heads of the two banks, Christian Sewing (Deutsche Bank) and Martin Zielke (Commerzbank), to consider the possibility of a merger, ideally before the European elections at the end of May. Minister Scholz himself confirmed at the beginning of last week that informal negotiations had begun.
After three years of consecutive losses, Deutsche Bank gained 341 million euros in 2018, but the bank is still far from achieving the benefits of the past. Commerzbank, meanwhile, won last year about two and a half times more than Deutsche Bank (865 million euros), but has not yet reached its goal of restructuring the group.
The merger of the two banks would make the new company the fourth largest lender in Europe with a balance of 1.81 billion euros and savings deposits of about 840,000 million euros, according to data from the end of December. Together, Deutsche Bank and Commerzbank employ some 140,000 people, more than half of whom are in Germany.
The representatives of the staff of the two banks advanced their rejection of the merger a few days ago, since they fear a strong cut of the workforce in up to 30,000 jobs. Der Spiegel He already reported in the middle of the week of the opposition of the workers' representatives and of the purpose of voting against in the event that the matter is addressed at the meeting of the supervisory council next week.