Deutsche Bank executives have decided to meet up with the executives of its long-time rival, Commerzbank, to discuss the possibility of unifying their companies as a strategic option to stop further damage and save their firms from losing more money. As per The Wallstreet Journal, while the talks are informal, Deutsche Bank expressed willingness for a tie-up if the deal is good.
This means that the Deutsche Bank's CEO, Christian Sewing, finally gives and let go of his opposition stance in the partnership with Commerzbank. The CEO was forced to consider the merger because he was pressured by the investors due to the bank's bleak performance in recent years. Likewise, The Guardian reported that Germany's newspaper, Welt am Sonntag, also wrote that Deutsche Bank and Commerzbank have come under political pressure to explore the partnership to avoid a foreign takeover of the Commerzbank.
Incidentally, many of the officials and investors in Deutsche Bank and Commerzbank agree with the merger and they are pushing for a deal to be reached. Paul Achleitner, Deutsche Bank's chairman, wants the merger to happen because through it, eurozone's second-largest bank will eventually be established and this will produce more or less €1.9 trillion in assets.
The Deutsche Bank is looking upon as a financial institution with global importance, however, in the past three years, it has been beset with an array of issues including continuous losses, money laundering controversies, boardroom battles and its position as the major lender to Donald Trump's businesses. Last year, Sewing stated that their company will try to fix the issues in the next 12 to 18 months before it can agree or take part in any deal but it appears that the merger is the only option they have.
In any case, the merger talks between Deutsche and Commerzbank are still at a very early stage so nothing is certain yet. It was reported that the meeting is not official with just a small group of executives in attendance.
"There is no decision by the supervisory board and no informal guidance to management," Financial Times quoted a person close to a board member as saying.
Then again, while the meeting between the former rival banks is currently on a superficial level, the talks are expected to prosper to the next stage. This is because the dialogues are getting deeper and sooner, it is likely that major shareholders will join in to begin the formal talks.
