Five years after the failed merger attempt between Deutsche Bank (DBKGn.DE) and Commerzbank (CBKG.DE), speculation about a potential deal has been reignited.
Germany, facing an uncertain outlook for bank profitability and a need to fill gaps in its budget, is exploring various options to raise funds, including selling stakes in the numerous companies it owns.
Finance Minister Christian Lindner is open to disposing of Germany’s remaining 15% stake in Commerzbank, with a preference for the government to exit the investment, according to an insider.
A merger with Commerzbank could offer Deutsche Bank an opportunity to diversify away from volatile investment banking earnings, enhancing its long-term stability.
Deutsche Bank has been engaged in internal discussions regarding potential deals, including the acquisition of banks like Commerzbank and ABN Amro.
Although there are no ongoing talks, the idea of a merger with Commerzbank has gained traction in recent months.
Germany’s stake in Commerzbank traces back to the 2008 global financial crisis and remains unprofitable for the government.
The German finance ministry emphasized that no decision had been made regarding the government’s exit from its Commerzbank stake, and any proceeds from such a sale would not flow into the federal budget.
Commerzbank declined to comment on the matter, as did Deutsche Bank. Commerzbank shares saw a 1.5% increase to 11.52 euros, outperforming Germany’s benchmark index, making it the top gainer among European banking stocks.
The bank’s total value stands at just over 14 billion euros ($15.35 billion).
On the other hand, Deutsche Bank shares declined by 0.65% to 11.97 euros, valuing the bank at 25 billion euros.
Experts believe that the normalization of interest rates could stimulate overdue consolidation plans in the banking sector.
Domestic mergers are considered more feasible than international ones, and the pressure on Germany to raise funds might serve as a catalyst for such moves, despite the complexities involved, such as Deutsche Bank’s low valuation and potential job cuts.
Deutsche Bank Chairman Alexander Wynaendts expressed the company’s readiness for M&A opportunities, though the chances of a sizable transaction in the near term appear relatively low due to numerous hurdles.
Germany aims to raise up to 4 billion euros this year by selling company stakes, with the funds earmarked for Deutsche Bahn, the state-owned rail company.
Reports also indicate that an investment bank has been hired to review Germany’s Commerzbank stake, although the adviser remains undisclosed.
Commerzbank has long been considered a potential partner for UniCredit, which already has a presence in Germany through HVB.
However, no comments were provided by UniCredit regarding merger talks.