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Germany’s two largest banks consider merger talks

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Two of Germany’s biggest banks Deutsche Bank and Commerzbank confirmed they were in merger talks. The banks did so in separate statements, but did not provide much details.  

According to Deutsche Bank’s statement

In light of arising opportunities, the management board of Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) has decided to review strategic options. In doing so, the management board of Deutsche Bank is focused on improving the growth profile and profitability of the bank.

The bank continued

There is no certainty that any transaction will occur. In this context, we confirm that we are engaging in discussions with Commerzbank.

Commerzbank’s statement was much terser.

Commerzbank and Deutsche Bank have agreed today to start discussions with an open outcome on a potential merger

The pros

State support: The German government is reportedly in support of the merger. A large bank would provide a supportive base for the country’s export-focused industries.  

In this age of protectionism, having a large bank would be an asset. The German government has informally stated it would not object to any resulting job cuts or losses, which would rise from the banking behemoth.

The German government holds a 15.5% stake in Commerzbank k, following a bailout a few years ago.

The cons 

Opponents of the bank fear the merger may result in job losses. Deutsche Bank is also contending with several issues such as money laundering as well as a role in what could be termed Trump gate.  

About Deutsche Bank 

Deutsche Bank was also founded in 1870 and is one of Germany’s biggest banks.  Its operations are divided into two customer-oriented business groups. The Corporate and Investment Bank Group serves corporate and institutional clients, offering investment banking and corporate financing services on a worldwide basis.  

The Private Clients and Asset Management Group focuses on retail banking, mostly in Germany, and the worldwide provision of asset management services for both individuals and institutions.  

About Commerzbank  

Commerzbank came into existence in 1870 when several merchants, merchant bankers and private banks founded the Commerz Und Disconto Bank in Hamburg. It became one of the leading banks in the country.

In  1920 it merged with the Mitteldeutsche Privat-Bank, a regional bank based in Magdeburg, and in 1929 with the Mitteldeutsche Creditbank based in Frankfurt am Main.  

In 1932, due to a crisis in the banking sector, the government ordered the merger in early 1932 of Commerzbank with the Barmer Bank-Verein Hinsberg, Fischer & Co. in Düsseldorf.

In 1940, the name Commerzbank Aktiengesellschaft, by which the bank was generally known, was officially adopted. 

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