Deutsche Bank Defiance Unites Merkel Centrists, German Fringe

(Bloomberg) -- Deutsche Bank AG and Commerzbank AG’s merger talks have prompted rare unity across Germany’s fractious political spectrum: a collective thumbs down.

Lawmakers from Chancellor Angela Merkel’s Christian Democratic-led bloc to the anti-capitalist Left party and far-right AfD are laying into the plans. With the Social Democratic colleagues of Finance Minister Olaf Scholz also questioning the deal, the project’s main benefactor -- along with his deputy Joerg Kukies -- looks increasingly isolated.

“I haven’t spoken to a single lawmaker or anybody beyond Kukies and Scholz who thinks this is a good idea,” Olav Gutting, a lawmaker for Merkel’s CDU party who sits on the finance committee of the lower house of parliament, said in an interview on Wednesday. “The skepticism is huge.”

While Bundestag politicians have little scope to halt a merger directly, parliamentary headwinds spell trouble for the project and increase the political price that Scholz and his party may ultimately pay for their support. German taxpayers are on the hook through the government’s 15 percent stake in Commerzbank and a combination would need to clear a variety of regulatory hurdles to go ahead.

There’s also the possibility that another bank may swoop in. The Financial Times reported Thursday that Italy’s UniCredit SpA is readying a rival bid for Commerzbank in case the Deutsche Bank talks collapse.

Job Concerns

Gutting offered a litany of reasons why the German lenders shouldn’t combine, including the time-consuming process of setting up a functioning business, which could delay much-needed restructuring. Meanwhile, lawmakers from the Social Democrats, Merkel’s coalition partner, are concerned about thousands of potential lost jobs.

“I have serious doubts,” Ingrid Arndt-Brauer, a Social Democratic lawmaker on the Bundestag’s finance committee, said in an interview. “The SPD is mostly concerned about the closure of branches and job cuts. This is what we will focus on in the evaluation of the merger.”

The resistance from coalition lawmakers creates a broad front opposing the deal. The Left party called a debate on the merger plans days after talks were announced, lambasting the plans. “You don’t get an eagle out of two sick turkeys,” the Left’s Fabio De Masi told Bundestag lawmakers on March 20. The environmental Greens have also voiced criticism, while Peter Boehringer, chairman of the Bundestag budget committee from the AfD, or Alternative for Germany, called it “pure state intervention.”

‘Political Decision’

The mounting opposition comes as discussions to combine Germany’s two biggest listed lenders enter a critical phase. Deutsche Bank is planning to make a decision on whether to proceed by April 26.

After weeks of apparent restraint since merger talks became official, Scholz revived his call for a national banking champion to support German business at home and abroad. Because of his active role pushing for a combination behind the scenes, he stands to bear the brunt of any political fallout if the deal goes bad. Merkel has steered clear of the issue, calling the talks a private business matter.

Political skepticism is backed by public opinion, with a Bild newspaper survey last week showing 43 percent against a merger and only 17 percent in favor.

“The lawmakers might not have a say in the merger decision, but at the end of the day this will also be a political decision,” said SPD’s Arndt-Brauer. “For now we are waiting to see what comes out of the merger talks.”

To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net;Birgit Jennen in Berlin at bjennen1@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Chris Reiter, Andrew Blackman

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