Deutsche Bank and Commerzbank, Germany’s two largest banks, called off widely criticized merger talks on Thursday, saying that they had concluded the risks of combining outweighed the benefits.
But the collapse of negotiations means that Germany’s banks must find another solution to a long list of urgent problems, including meager profitability, excessive labor costs and a shift to online banking that they have been slower than competitors to embrace.
Both Commerzbank and Deutsche Bank are very inefficient compared with European rivals, with costs that are too high in relation to revenue.
The decision ends a courtship that officially began in March, when the two banks said they would discuss combining to form Europe’s third-largest lender, with assets of €1.8 trillion and 140,000 employees.
The potential deal faced opposition from unions that represent bank workers and shareholders. It also was criticized by many financial experts and opposition politicians who said it made no sense to combine two lenders with profitability problems and depressed stock prices.
