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Deutsche Bank and Commerzbank merger collapse

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Merger talks between Germany’s top two lenders, Deutsche Bank and Commerzbank, have ended in failure.

The banks cited the need for extra capital, restructuring costs and execution risks as the reasons why the merger would not be in their best interests.

“It made sense to evaluate this option for domestic consolidation in Germany. However, we were always clear: We needed to be convinced that any potential combination would generate higher and more sustainable returns,” Christian Sewing, chief executive officer of Deutsche Bank, said in a statement Thursday morning.

Deutsche Bank shares rose more than 2% on the news, while Commerzbank’s stock fell by nearly 3%.

Reports and speculation regarding a merger had been rife for months, heightening under the tenure of German Finance Minister Olaf Scholz, who has spoken out in favor of strong banks for the European nation. But there’s been criticism too since it may lead to job losses.

Deutsche Bank’s management said Thursday that it “will continue to review all alternatives to improve long-term profitability and shareholder returns.”

Shares of Deutsche Bank and Commerzbank are both down more than 35% over a 12-month period and more than 80% over a 10-year period.

Source: CNBC


 Trader Georgi Bozhidarov

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