Deutsche Bank Deal Raises ‘Too Big to Fail’ Risk, Lawmaker Says

(Bloomberg) -- A merger between Deutsche Bank AG and domestic rival Commerzbank AG risks creating more problems than it solves, according to German lawmaker Danyal Bayaz.

The idea of a national banking champion is out of step with demands to further European financial integration, increases risk to Germany’s banking system due to its size, and could distract both banks from fending off fintech challenges, the Green party lower house legislator said in an interview with Bloomberg TV.

“A national banking champion is outdated and backward-looking,” said Bayaz, who previously worked with Boston Consulting. With Germany’s 15 percent holding in Commerzbank likely forcing it to participate in a capital increase for the merged lender, “the German government is very likely to be a part of this new bank, so taxpayer money is at risk. ‘Too big to fail’ is at risk.”

Exploratory talks between Deutsche Bank and Commerzbank are entering a critical phase with a decision on whether to proceed expected in coming days. A broad swathe of German lawmakers have come out against the prospective deal that was initially pushed behind the scenes by Finance Minister Olaf Scholz because they are concerned over job losses and increased financial risks.

Chancellor Angela Merkel said Wednesday that German and European regulators will evaluate any potential “systemic risks” when they assess the merger. She had been loathe to speak about the possible merger, and Bayaz criticized the government’s efforts to publicly distance itself from the plans.

“There is a political motivation behind it,” said Bayaz. “When we talk to the government today they say this is private business we have nothing to do with it, I don’t think this is credible. I don’t think this is acceptable."

The 35-year-old parliamentarian earlier this month was part of a group of lawmakers who pressured the government with a formal request to position itself on the merger plans.

To contact the reporters on this story: Chris Reiter in Berlin at creiter2@bloomberg.net;Matthew Miller in New York at mtmiller@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Raymond Colitt

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