Tags: deutsche bank | chair | holders | commerzbank

Deutsche Bank Chair Said to Talk to Holders on Commerzbank Deal

Deutsche Bank Chair Said to Talk to Holders on Commerzbank Deal
(Mohamed Ahmed Soliman | Dreamstime)

Thursday, 07 June 2018 02:24 PM

Deutsche Bank AG Chairman Paul Achleitner has spoken with top shareholders about merging with cross-town rival Commerzbank AG as Germany’s largest lender struggles with its turnaround plan, people familiar with the matter said.

Achleitner has discussed a combination of the two lenders with investors and key German government officials in recent months, said the people, who asked not to be identified discussing private conversations. While there are currently no formal discussions between the two banks and any such move is not imminent, the chairman is talking now with stakeholders about a possible deal down the road, they said. A Deutsche Bank spokesman declined to comment.

A key obstacle is Deutsche Bank’s depressed share price, with investors telling Achleitner that they don’t want a merger with Commerzbank at the moment because it would be highly dilutive and potentially trigger a capital increase and hefty write-downs, the people said. The two banks held talks in the summer of 2016, but decided then against a deal while they focused on restructuring their own businesses, a person with knowledge of the matter said at the time.

Speculation about a merger of the two German lenders -- or of one of them with an international competitor -- has increased in the past year after private-equity firm Cerberus Capital took a stake in both banks. Deutsche Bank has struggled to maintain the confidence of investors amid a tumultuous management reshuffle and a plan to significantly reduce its global footprint and workforce under new Chief Executive Officer Christian Sewing.

The shares have declined 39 percent this year, giving the bank a market capitalization of just 19.9 billion euros ($23.5 billion). Commerzbank is down 24 percent in 2018, valuing the lender at 11.9 billion euros.

While a merger would potentially create massive synergies because the two could dramatically cut retail outlets in their German home market, the ensuing job reductions would likely meet resistance from labor unions which exert considerable influence on the boards of both companies.

The German government would also play a major role in any deal given it’s the largest shareholder in Commerzbank, with a stake of more than 15 percent. The government has repeatedly said the country needs a strong international bank, with Finance Minister Olaf Scholz reiterating that message as recently as April.

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Deutsche Bank AG Chairman Paul Achleitner has spoken with top shareholders about merging with cross-town rival Commerzbank AG as Germany's largest lender struggles with its turnaround plan, people familiar with the matter said.
deutsche bank, chair, holders, commerzbank
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2018-24-07
Thursday, 07 June 2018 02:24 PM
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