Deutsche Bank Watchdogs Push Back Against National Champion Goal

(Bloomberg) -- European and German bank watchdogs signaled they won’t simply bow to the desire to create the kind of national champions that the German government has in mind by brokering a merger between the country’s two biggest listed banks.

“The term ‘national champion’ isn’t a category supervisors use,” said Joachim Wuermeling, a top Bundesbank official who also sits on the European Central Bank’s oversight arm. Regulators don’t base their decisions on what they or others think the banking industry should look like and they don’t let national interests shape their actions, he said.

Deutsche Bank Watchdogs Push Back Against National Champion Goal

That echoes comments from Andrea Enria, who leads the ECB’s supervisory arm. “I don’t particularly like the idea of national champions, of European champions,” he said in an interview with the Financial Times published on the ECB’s website. “If there are foreign banks, foreign investors, bringing their expertise, their capital, into your jurisdiction, that should be welcome.”

Their views matter because bank mergers require the ECB’s approval. Deutsche Bank AG and Commerzbank AG confirmed on Sunday that they have entered talks on a possible government-backed tie-up after their separate turnaround plans failed to convince investors. Germany sees the deal as a way to ensure that it still has a bank capable of serving its export-oriented economy on the global stage, people familiar with the matter have said.

Neither of the supervisors commented specifically about a merger between the two German banks.

Banking watchdogs are neutral in their view of mergers, Wuermeling said at a conference organized by the Bundesbank in Frankfurt on Tuesday. The supervisors check whether merged banks satisfy “regulatory requirements now and in the future. That calls for a sound and sustainable business model,” he said.

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