Deutsche Bank, Germany’s largest lender by far, confirmed Sunday that it was holding merger talks with Commerzbank. The German government holds a 15% stake in Commerzbank.
“In light of arising opportunities, the management board of Deutsche Bank has decided to review strategic options,” the company said in a statement. It cautioned that there was no guarantee of a deal.
The merger would help consolidate Germany’s crowded retail lending market by creating a single bank with combined assets of €1.9 trillion ($2.2 trillion) and roughly 150,000 employees.
Yet there are doubts that getting bigger will resolve Deutsche Bank’s consistent problems with profitability and help it compete with American rivals that have fared much better following the global financial crisis.
It lost €409 million ($468 million) in the final three months of 2018, however. The bank said the losses were caused by challenging financial markets, especially for its fixed income trading division.
Deutsche Bank said Sunday that the merger talks were part of a strategic review aimed at improving its “growth profile and profitability.”
There have long been rumblings that weak profits and rising costs could lead to a wave of bank consolidation in Europe, but deals have remained elusive.
S&P said in its assessment that it believed management “is taking decisive actions” to control costs. But it said the overhaul would not bear fruit in 2019, with the full benefits not being realized until 2021.
Source : Nbcnewyork