Deutsche Bank, Commerzbank terminate merger talks

Deutsche Bank, Germany’s largest bank, and Commerzbank have terminated negotiations about a possible merger, the two banks announced on Thursday.

“This transaction would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration,” Christian Sewing, chief executive officer (CEO) of Deutsche Bank, and Martin Zielke, CEO of Commerzbank, announced unanimously.

In mid-March, the two major German banks announced that they were in talks about a possible merger. The banks’ management boards wanted to examine whether a merger would “strengthen the growth and profitability” of both banks.

At the time, Sewing had already stated that “experience has shown that there can be many economic and technical reasons that could stand in the way of such a step.”

The merger of the two banks was met with criticism right from the start. Ver.di, one of Germany’s largest trade unions, feared that the merger would lead to the loss of around 30,000 jobs without any “recognizable added value.”

German citizens also took a critical view of the possible merger of the banks. According to a survey by opinion research institute Insa, almost 43 percent of Germans were against the merger, while only 17 percent were in favor of it.

Germany’s Finance Minister Olaf Scholz was among the supporters of the merger. Scholz had been calling for a “national champion” in the German banking sector which would be able to compete internationally since 2018.

The termination of the merger talks between the two German banks “is to be welcomed from a macroeconomic point of view,” commented Franziska Bremus, economic expert at the German Institute for Economic Research (DIW).

Instead, politics should “identify and remove legal and institutional obstacles to cross-border consolidation of the European banking sector,” Bremus demanded.

According to the DIW expert, bank mergers across national borders could stabilize the banking landscape, “because profits and losses would be spread more widely and the mutual dependence of banks and their home countries would decrease.”