Germany weighs mega bank merger

The German government is ready to orchestrate a merger between Deutsche Bank and Commerzbank to ensure that Europe’s largest economy has at least one lender capable of backing its companies abroad, Focus magazine reported.

The finance ministry said it did not want to get involved in any speculation. Deutsche Bank declined to comment but referred to recent comments by CEO Christian Sewing dismissing persistent merger speculation.

Deutsche, facing negative headlines around two highprofile money laundering cases, has seen its share price fall to record lows. Shares in Commerzbank, which was bailed out after the global financial crisis a decade ago, have also headed lower.

Citing sources, Focus said that the finance ministry was examining scenarios including one in which the state takes a stake in Deutsche Bank and then leads a merger of the two banks through a share swap.

A second option being examined was to tap investors and possibly the German state to finance a takeover of Commerzbank by Deutsche, Focus said, while a third would foresee creating a holding company as a vehicle for a merger.

Sewing reportedly opposes a merger with Commerzbank, while Commerzbank CEO Martin Zielke is open to it. Deutsche’s shares declined by 51 per cent this year and Commerzbank’s by 45 per cent. Deutsche’s market capitalisation shrivelled to €15.9 billion (Dh66.5 million or $18.1 billion), and Commerzbank’s is down to €8.6 billion.