Berlin backs Deutsche Bank merger despite risk of shortfall, sources say GlobeBusiness
. The state owns a 15 per cent stake of Commerzbank and is expected to be a shareholder in the new group.
A second German official said Deutsche’s future was in question because high costs left it with little profit. Asked about a merger between the two banks, a third official said one was urgently needed to reduce the number of branches in an overcrowded market. Deutsche Bank has said it is stable. Last month, as it announced a return to profit in 2018, its chief executive Christian Sewing said it was “on the right track” for growth and lower costs.Story continues below advertisement“In 2016 … Deutsche went to the brink,” said the first official.
Berlin has been examining options for Deutsche for many months. Senior German officials even participated in informal, exploratory discussions in recent months with Switzerland’s UBS about a merger with Deutsche, two more sources said.But there was little appetite in Switzerland for making UBS bigger or for merging with a weaker Deutsche, so German officials reverted to Commerzbank, those people said. A UBS spokesman declined to comment.
German officials have identified Deutsche Bank as a national “champion” and the fund is expected to provide state backing or guarantees that would help companies raise cash from pension funds or insurers. Achim Wambach, president of influential German think tank ZEW research institute, said it was unclear whether such a tie-up would improve financial stability.
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