Deutsche Bank and Commerzbank merger talks collapse

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Deutsche Bank and Commerzbank merger talks collapse

Picture taken on March 17, 2019 shows the headquarters of German banks Deutsche Bank (L) and Commerzbank in Frankfurt am Main, western Germany.










FRANK RUMPENHORST | DPA | Getty Images

Picture taken on March 17, 2019 shows the headquarters of German banks Deutsche Bank (L) and Commerzbank in Frankfurt am Main, western Germany.

Merger talks between Germany’s top two lenders, Deutsche Bank and Commerzbank, have ended in failure.

Deutsche Bank shares rose more than 2% on the news, while Commerzbank‘s stock fell by nearly 3%.

Reports and speculation regarding a merger had been rife for months, heightening under the tenure of German Finance Minister Olaf Scholz, who has spoken out in favor of strong banks for the European nation. But there’s been criticism too since it may lead to job losses.

An industry source with knowledge of the matter, who preferred to remain anonymous, told CNBC last month that there was not widespread support for the merger within Deutsche Bank.

“The general feeling is that the merger is not a great idea since Commerzbank doesn’t have the same amount of credibility on the street as Deutsche Bank when it comes to clients and this can impact future trades,” the source said.

Both banks have struggled to return to profit since the global financial crisis of 2008, and the subsequent euro zone sovereign debt crisis of 2011. In the past few years, Deutsche Bank in particular has made headlines for all the wrong reasons — from settlements with the U.S. Department of Justice, to management reshuffles, weak earnings, constant restructuring and steep stock price falls.

More recently, there’s been reports of the Federal Reserve investigating its role in a money-laundering scandal at Danske Bank and an inquiry from two U.S. House of Representatives committees on the lender’s ties to President Donald Trump. Earlier this month, a report in U.K. newspaper The Guardian said the German bank could face legal action over a $20 billion Russian money-laundering scheme.

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