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German hopes of financial ‘national champion’ die
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Germany’s two biggest lenders, Deutsche Bank and Commerzbank, said yesterday they had called off talks on a possible merger, dashing Berlin’s hopes of creating a financial “national champion.”
“After thorough analysis, we have concluded that this transaction would not have created sufficient benefits” to justify the risks and costs of the complex deal, Deutsche Bank Chief Executive Christian Sewing and Commerzbank chief Martin Zielke said in a statement.
“After careful analysis, it became apparent that such a combination would not be in the interests of either bank’s shareholders or other stakeholders.”
Both investors and employee unions had strong reservations about a tie-up between the Frankfurt giants.
“The disadvantages of such a merger, especially in relation to jobs, would have been disproportionate,” said Frank Bsirske, head of service workers’ union Verdi.
But the retreat from the mooted merger is a setback for Chancellor Angela Merkel’s government.
Finance Minister Olaf Scholz, especially, had hoped to persuade reluctant executives in Frankfurt to create a national banking giant for Europe’s strongest economy.
Berlin, which still holds a 15-percent stake in Commerzbank after a state rescue in 2009, was encouraging the start of talks long before the banks’ official announcement in mid-March that they would sound one another out.
“Globally active German industry needs competitive banks that can accompany them across the world,” Scholz reiterated in a statement yesterday.
But he acknowledged that mergers or other forms of cooperation “only make sense if the business case adds up and if they’re headed toward a dependable business model.”
Financial sector voices had warned that the lenders were weakened after years of limping recovery from the financial crisis and its fallout, and tackling far-reaching restructuring projects of their own.
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