The future of a merger between Deutsche Bank and Commerzbank is to be decided on 9 April as the latter pushes for a quick decision at a time when the merger seems politically unpalatable and costly due to its questionable strategic rationale.
While Germany’s Finance Minister Olaf Scholz favours the consolidation of Deutsche Bank and Commerzbank – giving rise to the third biggest European bank – the German government appears less eager to the entertain the idea of pouring public money into the bank.
The merger would require the bank’s recapitalisation to the tune of €10 billion and would make the state a major shareholder in the new lender. But this possibility is staunchly opposed by the chair of the Bundestag’s finance committee, Bettina Stark Watziner.
The government cannot block the merger without the approval of members of the German Chancellory. For the time being, it remains unclear that Scholz can secure the required political backing for a “national champion” policy.
The merger would come with significant restructuring costs, loss on investment and the loss of 25,000 to 30,000 thousands of jobs. At the same time, both the opposition and the Christian Democrats oppose the entry of a single dominant lender that would distort competition.
There is an alternative plan, however, as Italy’s Unicredit wants to buy out a significant share in Commerzbank and merge it with HypoVereinsbank to create a smaller, but a more agile national champion that is based in Germany.