Deutsche Bank and Commerzbank began talks on a possible merger that will bring together two of Germany's largest lenders. The two banks have been rivals for a long time so this news was a bit surprising for most people.
As per BBC News, if the merger will happen and succeed, it will result in substantial cost savings since some of the branches of Deutsche Bank and Commerzbank will surely close down. While the government of Germany seems to support this planned merger, critics are saying that the unification of the two largest banks in the country is risky and complicated.
Likewise, Deutsche Bank and Commerzbank's economic status are slowing down so, in order to save them from going down further, the tie-up has been brought up. Now, the officials of these banks are seriously talking about teaming up to create one enormous bank but some experts say that forming them into one company will only create more problems since separately, the two of them are already struggling.
"In light of arising opportunities, the management board of Deutsche Bank has decided to review strategic options," the bank said in a statement on Sunday.
The plans of a merger were also greeted with opposition from Germany's workforce unions like the Verdi labor union because it is certain that once the deal push through, Deutsche Bank and Commerzbank will cut jobs and it was estimated that over 10,000 workers may go jobless once the two banks sign the deal.
The talk on the merger has been revealed on Sunday and Deutsche stated that although it is possible that the talks will fail, it will remain "focused on improving the growth profile and profitability of the bank." Commerzbank will also accept the outcome of the discussions and will try other options in case the merger will not take place.
"We are going to seriously evaluate a merger," someone with knowledge on the merger talks said. "But there is no guarantee that there will be a deal in the end."
CNBC reported that the disclosure of the talks to the public increased the chance of positive outcomes that will turn Deutsche Bank and Commerzbank into one corporation. It was said that the government holds over 15 percent stake of the latter and it is in favor of the merge.
Deutsche, the largest bank in Germany, and Commerzbank are the country's only remaining major public bank that stood on its own until now, after a series of bank mergers in Germany. But it seems the two will join the others in once they sign a deal for a tie-up.
