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Written by Elisa Martinuzzi, Christian Kremer, Tom Sims
LONDON (Reuters) – Five years after Deutsche Bank and Commerzbank scrapped plans to merge, uncertain prospects for the banks’ profitability and the need to plug holes in Germany’s budget have led to concerns over a potential merger. Speculation is reignited.
Germany said it was considering all options to raise money by selling some stakes in more than 100 companies.
A sale of the remaining 15% stake in Commerzbank is not imminent, according to people familiar with his thinking, but Finance Minister Christian Lindner is open to the deal and hopes the government will eventually exit the stake. It is said that there is.
The merger with Commerzbank will allow Deutsche Bank to further diversify away from volatile investment banking revenues and strengthen the lender’s long-term stability, the person said, speaking on condition of anonymity. However, he said this is also a factor that could sway the German government.
Deutsche Bank, which has completed most of its multi-year restructuring plan, has recently ramped up internal discussions on deals, including potential acquisitions of banks such as Commerzbank and ABN AMRO, Bloomberg News reported Friday, citing sources familiar with the matter. reported without naming names.
Another person familiar with the situation told Reuters that Deutsche Bank has been close to reviving a merger idea with Commerzbank in recent months, even though no actual talks have taken place.
Treasury officials and a Commerzbank spokeswoman did not immediately respond to requests for comment outside of business hours. Deutsche Bank declined to comment.
Deutsche Bank shares closed 1.23% lower at 12.05 euros on Friday, valuing the bank at 25 billion euros ($27.37 billion). Commerzbank shares closed the day unchanged at 11.35 euros, giving it a market capitalization of 14 billion euros. Deutsche Bank’s low valuation and the need to write down assets will complicate the merger and could lead to painful job cuts to reap the benefits of combining overlapping businesses. It trades at a fraction of its book value.
Deutsche Bank Chairman Alexander Weinent said in November that he would like to prepare for M&A if the opportunity arises.
“Given the many hurdles, the likelihood of a large transaction taking place in the short term is relatively low,” RBC Europe analyst Anke Reingen said in a note to clients on Saturday.
But he said media speculation and previous comments from the bank made action more likely.
Germany’s investment in Commerzbank dates back to the 2008 global financial crisis and continues to cost the government money.
The government plans to sell shares in the company this year to raise up to 4 billion euros, according to a German finance ministry document seen by Reuters. The money will be funneled to the state railway company Deutsche Bahn.
Süddeutsche Zeitung reported on December 28 that Germany had hired an investment bank to review its Commerzbank shares, without identifying the adviser.
Commerzbank has also long been seen as a potential partner for UniCredit, which already has a presence in Germany through HVB, and the two companies reportedly held merger talks before Russia’s invasion of Ukraine in 2022. A UniCredit spokesperson declined to comment.
(1 dollar = 0.9133 euro)
(Reporting by Elisa Martinuzzi, Christian Kraemer and Tom Sims; Additional reporting by Pablo Mayo Cerqueiro and Emma-Victoria Farr; Editing by Anousha Sakoui, Ros Russell and Christina Fincher)
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