(18 March 2019 – Europe ) Deutsche Bank has agreed to government mandated merger talks with Commerzbank as both groups encounter difficulty generating revenue growth.
In 2018 Deutsche’s incoming CEO attempted to refocus the bank on vanilla capital intensive banking operations such as transaction banking, cash management and lending, steering the group away from higher risk and relatively less capital intensive investment banking. Commerzbank divested several business units in 2018 with a view to maintaining only essential operations in order to continue driving costs lower and improve profitability.
The merger could result in deep headcount reductions and political turbulence amid decelerating European Union (EU) economic growth and complex systems integration following an extensive wind back in investment banking operations. Separately, Allianz is considering a possible merger deal of its asset management arm with Deutsche Bank’s DWS Group.
A successful Deutsche Bank and Commerzbank merger would result in the group becoming Europe’s second largest bank behind only HSBC. Deutsche Bank is currently the fifth largest bank while Commerzbank is the 23rd largest. The move is expected to improve competitiveness for the combined entity both domestically and in key international markets where Deutsche has withdrawn many products and services in recent years.