File-Picture taken March 11, 2019 shows the head offices of Deutsche Bank, left, and Commerzbank, right. (Arne Dedert/dpa via AP)

Germany's Deutsche Bank, Commerzbank to hold talks on merger

March 17, 2019 - 8:57 am

BERLIN (AP) — Germany's biggest bank, Deutsche Bank, and domestic rival Commerzbank have decided to open talks on a possible merger. Sunday's announcement followed months of speculation about a combination of the lenders, and both stressed that there is no certainty a deal will emerge.

Commerzbank said in a one-sentence statement that the banks "have agreed today to start discussions with an open outcome on a potential merger."

Deutsche Bank said its management board had decided to "review strategic options" and added that that there is no certainty of any transaction emerging. It added that "in this context we confirm that we are engaging in discussions with Commerzbank."

A merger would combine two banks that had more than 133,000 full-time employees between them at the end of last year and have had troubles in recent years. Merger talk has been greeted by a degree of skepticism since both banks are busy overhauling their own businesses, raising the question of how they would integrate a new partner.

Deutsche Bank has been engaged in a drawn-out restructuring and cost-cutting effort in an attempt to return to steady profits and put years of legal problems behind it. In 2018, it made its first full-year profit in three years, though it reported a loss for the fourth quarter.

In Sunday's statement, Deutsche Bank said its management "is focused on improving the growth profile and profitability of the bank."

Commerzbank, which received government aid during the financial crisis, also has been restructuring. The government still has a stake in the company.

There has been repeated speculation over recent months that the two lenders, with apparent encouragement from the German government, would explore a possible combination.

The finance ministry has said that Germany needs strong banks but hasn't commented on reports that it favors a merger. The economy ministry recently has talked of the importance of national and European "champions" that can compete on the world business scene, naming Deutsche Bank as an existing one.

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