Merkel’s Government Slammed Over Deutsche Bank Deal
Deutsche Bank Deal Backlash Intensifies as Merkel Seeks Distance
(Bloomberg) -- Chancellor Angela Merkel’s government is facing a growing barrage of public criticism over a push to combine Deutsche Bank AG and Commerzbank AG, threatening to unsettle Germany’s mainstream parties just weeks before European Parliament elections.
Opposition is swelling over potential job losses and financial risks following Sunday’s announcement that the country’s two biggest listed lenders will hold merger talks. The main barbs were directed at Finance Minister Olaf Scholz after he and his deputy, Joerg Kukies -- a former Goldman Sachs banker -- spent months promoting a deal behind the scenes.
“What Scholz is doing is a disgrace,” Sueddeutsche Zeitung wrote Wednesday in an editorial on the merger, with the daily accusing the politicians behind the deal of “inflated egos and hubris.” Weekly Der Spiegel blasted the government as “horror managers.”
The political backlash intensified when the lower house of parliament debated the impact of the proposed deal Wednesday. The anti-capitalist Left party called for the discussion at short notice. Merkel’s Christian Democratic bloc and Scholz’s Social Democrats are seeking to keep voters from defecting to political fringes in May’s European Parliament elections.
‘Mega Bad Bank’
The Left party’s attack was led by Fabio De Masi, who accused Scholz and Kukies of pushing the merger of a “mega bad bank” against the will of the industry, unions and the government’s economic advisers.
“You don’t get an eagle out of two sick turkeys,” De Masi said, assailing Scholz’s earlier push for a national champion. “If this is a champion, I don’t want to know what the loser looks like.”
Christine Lambrecht, Scholz’s deputy, responded by saying that the minister “at no point supported a merger of the two banks and you will never find any evidence of this, even if you repeat the numerous accusations.”
Over the coming weeks, Deutsche Bank Chief Executive Officer Christian Sewing and his Commerzbank counterpart Martin Zielke will discuss if a tie-up makes sense. Experts close to the government are skeptical.
“There is a big risk the merger would fail,” Isabel Schnabel, an independent economic adviser to the government, said by email. “A merger with Commerzbank wouldn’t solve Deutsche Bank’s problems. It would tie the bank down for years to come and cause huge upfront costs, while any savings would come much later, if at all.”
While the Finance Ministry has long supported the idea of merging Deutsche Bank and Commerzbank in a bid to create a more stable lender before the next downturn, it never publicly confirmed the plan. On Sunday, it only issued a terse statement acknowledging the talks without endorsing them.
But the ministry never denied its involvement either, and Scholz in February signaled support for a German champion bank that could compete in the global finance industry. Government officials last year spoke almost two dozen times with Deutsche Bank executives, according to a January document from the Finance Ministry, which on Sunday confirmed that it’s in talks with both banks.
“We’ll make sure we’re kept informed, but we’re still a long way off because we have no idea what the open decision-making process of the two management boards will be,” Scholz said on Wednesday. The Finance Ministry will wait to see “what they want to recommend to their shareholders” and how banking watchdogs react, adding “it’s not our turn.”
Merkel Distance
Scholz, a long-time official from the labor-friendly SPD, has come under attack from his own constituency. With tens of thousands of jobs threatened in the deal, Ver.di and Germany’s DBV banking union dismissed the merger as “economic nonsense.”
Merkel sought to distance herself from the plan, saying it’s up to Deutsche Bank and Commerzbank executives to determine their strategy.
While her administration would have “a certain interest” in the deal because of its near 16 percent shareholding in Commerzbank, “I very much don’t want the government to intervene,” Merkel said Tuesday.
To contact the reporters on this story: Steven Arons in Frankfurt at sarons@bloomberg.net;Birgit Jennen in Berlin at bjennen1@bloomberg.net;Patrick Donahue in Berlin at pdonahue1@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, ;Ben Sills at bsills@bloomberg.net, Andrew Blackman
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