Deutsche Bank and Commerzbank in merger talks

Germany’s two biggest banks, Deutsche Bank and Commerzbank, are in formal talks about a merger the two rival companies confirmed.

The announcement caps months of speculation that the two struggling banks would attempt to join.

A merger could result in massive cost savings, in particular by closing branches although integrating the firms would be complicated and risky. Also, the deal faces opposition from unions who fear job cuts if a merger is agreed. Germany’s Verdi labour union has objected strongly to the possible merger, arguing that at least 10,000 jobs are at risk.

The German government, which owns a 15.5% stake in Commerzbank, appears to favour a deal.

German Finance Minister Olaf Scholz had urged the two to consider merging, as he believes Germany needs a national champion in the banking sector.

Combined the banks would have one fifth of Germany’s High Street banking business and control €1.8 trillion of assets, such as loans and investments.

Both banks have been finding it difficult to grow and are facing an economic slowdown in the Eurozone and in Germany.

Via DW