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April 25, 2019updated 26 Apr 2019 9:11am

Deutsche Bank and Commerzbank call off merger talks

By Briony Richter

Merger talks between Deutsche Bank and Commerzbank have collapsed.

Both banks have said that the deal would “not provide sufficient added value.”

Folding to the concerns of shareholders and employees, the banks stated that there were too many hurdles in the way to justify moving forward with the deal.

For Q1 2019, Deutsche Bank expects to report income before income taxes of approximately €290m. Furthermore, it expects net income of approximately €200m. The results will be released 26 April 2019.

The German banks entered the merger talks just last month as a way of accelerating transformation for both. However, the collapse means that both banks will have to look elsewhere for other solutions to tackle their ongoing issues.

Continuing to shift to digital banking needs to be addressed. Digital banking is extremely popular in Germany and the competition is tough.

CEO of Commerzbank, Martin Zielke, stated: “It made sense to evaluate this option for domestic consolidation in Germany. However, we were always clear: we needed to be convinced that any potential combination would generate higher and more sustainable returns for shareholders and allow us to enhance our value proposition to clients.

“After thorough analysis, we have concluded that this transaction would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration. I would like to thank Christian Sewing and everyone involved for the constructive discussions over the past few weeks. We will continue our strategy, grow together with our clients and invest in our future.”

Deutsche Bank Commerzbank merger not to be

Deutsche Bank stated that it will continue to review all alternatives to improve long-term profitability and shareholder returns.

Initially the merger talks were backed by the German Government. However, both banks have agreed that the merger would not benefit either party as much as expected.

Speaking on the merger, CEO of Deutsche Bank, Christian Sewing, stated: “We have consistently said that we want to play an active role in the consolidation of the European banking sector. For that reason, we decided to evaluate this option thoroughly.

“Our discussions with Commerzbank were very intense and took place in a constructive and mutually respectful atmosphere. However, we have now decided not to pursue this possibility further.

“After thorough analysis, we have concluded that this transaction would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration.”

 

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