Germany’s two largest lenders have begun negotiating a merger, according to Deutsche Bank and Commerzbank.
The two lenders have combined assets of €1.9 trillion, a 20% share of the German market, and would emerge as the third biggest in Europe after HSBC and BNP Paribas.
Though the new behemoth would be a truly global bank, It is not clear how profitable the new bank would be as Deutsche Bank continues to hem €410 million, while Commerzbank reported a profit of €113 million.
Both banks have been trading at near-decade lows amid news of their potential merger.
The unions representing the 140,000 employees of the two lenders oppose the merger, which would lead to thousands of job cuts. The two banks date back to the 1870s, are headquartered in Frankfurt, and are traditional rivals.
Deutsche Bank lacks a clear identity or competitive advantage and is caught up in every major banking scandal that is currently in the news. These have included cases where Deutsche Bank was a major player in dubious subprime mortgage cases and the rigging interest rates.
The German lender is also deeply tied to the Danske Bank money-laundering scandal and is currently the subject of two congressional investigations and a subpoena by New York’s attorney general.
The process of the merger itself could cost up to €8 billion, linked to both integration and the revaluation of assets.