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Deutsche Bank, Commerzbank’s Leaders Want Mergers But Not Now

Deutsche Bank, Commerzbank’s Leaders Want Mergers But Not Now

Deutsche Bank AG and Commerzbank AG’s top executives think bank mergers are a great idea, they just don’t want them to happen right now.

Consolidation could help remedy bank’s chronic lack of profitability but it isn’t “a short-term topic” for the lender, Commerzbank Chief Financial Officer Bettina Orlopp said at a virtual event hosted by the Bundesbank. Her comments echo Deutsche Bank CEO Christian Sewing, who last week ruled out big deals for his bank until the end of a restructuring that lasts through next year.

Germany’s two biggest publicly-traded lenders have both been locked for years in cost-cutting programs aimed at improving some of the worst returns on equity in the European financial industry. They also held formal merger talks about 18 months ago before breaking them off, saying the deal’s perceived benefits didn’t outweigh the risks.

Commerzbank’s appointment on the weekend of Deutsche Bank executive Manfred Knof as CEO “has reignited debate over a potential merger between the two,” Bloomberg Intelligence Senior Analyst Philip Richards wrote in a note earlier Wednesday. “While possible, we expect Knof to be given the mandate to push through a strategic overhaul of the smaller bank first, focused on job cuts and corporate bank downsizing.”

Deutsche Bank would, in any case, prefer a cross-border deal, Chief Financial Officer James von Moltke recently indicated. A merger with Swiss bank UBS AG is Sewing’s preferred merger option, Bloomberg News has reported.

As for Commerzbank, several foreign banks including ING Groep and UniCredit SpA showed interest in taking over the lender after the failed talks with Deutsche Bank, people familiar with the matter have said.

©2020 Bloomberg L.P.