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Germany is forcing a marriage that may not work



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

FRANK RUMPENHORST | DPA | Getty Images

The photo taken on March 17, 2019 shows the headquarters of German banks Deutsche Bank (L) and Commerzbank in West Germany's Frankfurt am Main.

As early as 2007, Deutsche Bank had its own balance sheet of $ 2 trillion ($ 2.25 trillion) and a market capitalization of nearly € 50 billion, compared with the relatively modest Commerzbank balance sheet of € 270 billion and market capitalization of 17 billion euros. In the last ten years, the gap has narrowed.

Deutsche Bank has lost 600 billion euros in assets and its market capitalization has fallen by more than 60 percent. Commerzbank, on the other hand, raised some £ 100 billion in assets, but lost half of its market capitalization.

A merger would give Deutsche Bank and Commerzbank access to a total of nearly 1.9 trillion euros, the German government seems

but this would probably be considered an embarrassment for people like John Cryan, the former CEO of the Germans Bank, Christian Sewing, the current head of the bank, and Peter are viewed Altmaier, the German Minister of Economic Affairs. The three have always reaffirmed their confidence in Deutsche Bank's strategy and position as one of Europe's strongest banks.

Sewing took over the role of CEO last April and said the bank will consider merger talks in September, boosting its profitability over the next 18 months. Little knew Sewing that he would be forced to merger talks before the end of these 18 months.

While the merger of Deutsche Bank will allow access to a much larger balance sheet, this could also mean a billion dollar financial hole, as it would force the revaluation of lenders' assets and force them to reduce their exposure to 30,000 jobs.

The merger will be associated with certain reservations when it occurs. The Federal Government still owns about 15 percent of Commerzbank, and a merger would mean greater governmental voice in dealing with the bank. This could also mean that banks could be pressured to be more risk-averse than ten years ago.


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