Discussions of a potential merger between Germany’s two largest lenders, Deutsche Bank and Commerzbank, yesterday collapsed.
In a statement released by Deutsche Bank, the lender announced that “after careful analysis it became apparent that such a combination would not be in the interests of either bank’s shareholders or other stakeholders”.
Furthermore, Deutsche Bank CEO Christian Sewing added that the transaction would not have created “sufficient benefits” to offset the additional execution risks, restructuring costs and capital requirements associated with a merger of this size.
However, Deutsche Bank announced it will continue to review all alternatives to improve long-term profitability and shareholder returns.
The two German banking giants began talks last month after German officials, led by German finance minister Olaf Scholz, called for a national banking champion after becoming concerned over the health of both banks. The government, which owns a 15 per cent stake in Commerzbank, suggested it would not object to any necessary cost-cutting moves or job losses.
Despite this, the potential merger received opposition from trade unions as it put 30,000 jobs at risk, and was also criticised by investors and analysts, with many questioning whether it made economic sense to integrate two struggling banks.
Other institutions, such as ING and Unicredit, have expressed an interest in a potential tie-up with Commerzbank.
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