Speculation surrounding a potential merger between Deutsche Bank and Commerzbank has rekindled, five years after a previous attempt was abandoned. Germany is exploring various options to raise funds, and this includes considering the sale of its remaining 15% stake in Commerzbank. Although a sale is not imminent, Finance Minister Christian Lindner is reportedly open to the idea, expressing a preference for the government to exit the stake. A potential merger could offer Deutsche Bank the opportunity to diversify away from the volatile earnings of its investment banking division, contributing to the bank’s longer-term stability. The German government, grappling with the need to plug a hole in its budget, is closely monitoring the situation.
Deutsche Bank, which has recently completed a significant restructuring plan, has reportedly increased internal discussions on potential deals, including the acquisition of banks such as Commerzbank and ABN Amro, according to Bloomberg News. Although no live discussions are currently underway, Deutsche Bank has shown a growing interest in the possibility of reopening talks with Commerzbank. The German government’s stake in Commerzbank dates back to the 2008 global financial crisis and remains a loss-making investment. While a sale is being considered, no decision has been made, and if a sale were to occur, the proceeds would not immediately flow into the federal budget, according to a German finance ministry spokesperson.
The potential merger faces several challenges, including Deutsche Bank’s relatively low valuation, potential asset write-downs, and the likelihood of substantial job cuts to realize synergies. Despite these obstacles, market speculation and the increased likelihood of a move have been fueled by comments from Deutsche Bank Chairman Alexander Wynaendts, who stated in November that the bank wants to be ready for mergers and acquisitions if opportunities arise. The move comes as Germany explores ways to raise funds by selling stakes in state-owned companies, with a plan to raise up to €4 billion this year. The funds could be allocated to Deutsche Bahn, the state-owned rail company, emphasizing the government’s commitment to addressing financial needs across various sectors.